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Functions of Government* 



FRANK D. LARRABEE. 



FUNCTIONS OF GOVERNMENT 



A DEVELOPMENT OF PRINCIPLES THAT NECESSITATE 
THE EXISTENCE OP GOVERNMENT. 



A CONSIDERATION OF CERTAIN FUNCTIONS RELATIVE 
TO MATTERS IN RESPECT TO WHICH OUR NATION- 
AL, STATE AND LOCAL GOVERNMENTS HAVE 
BEEN GUILTY OF NONFEASANCE OR MAL- 
FEASANCE TO AN EXTENT THAT AC- 
COUNTS FOR OUR PRESENT CONDI- 
TION OF INDUSTRIAL DEPRESSION. 



Frank D. Larrabee. 



16180/ 



1897: 
ALL & Stoker Co., Printers, 
Minneapolis, Minn. 



Vs 



.^ 



e"^v 




TCs 



Copyright 1897, 

BY 

FRANK D. LARRABEE. 



CONTENTS. 



CHAPTERS PAGES 

I. iNTRODUCnON, 1-7 

II. The Question Stated, 8-13 

III. Rights op Individuals in Society Without a 

Government, 14-19 

IV. The Position of Anarchists Untenable, . 20-22 

V. The Position oe Socialists Untenable, . . 23-28 

VI. The First Function oe Government, . . 29-40 

VII. The First Duty oe Government Universally 

Neglected — Consequent Evils — Remedy, 41-50 

VIII. Liberty, 51-58 

IX. Monopolies, 59-86 

X. Money — Its Evolution, 87-108 

XI. Money (Continued) — Economical Expedients 

Aefecting the Volume of Money, . . 109-124 

XII. Money (Continued) — Governmental Errors, 125-153 

XIII. Money (Continued) — Free Coinage, . . . 154^173 

XIV. Taxation, 174-205 

XV. Conclusion, 206-220 



Functions of Government* 



CHAPTER I. 
INTRODUCTION. 



No other territory of equal area is more highly 
favored by nature than that of the United States. Ex- 
tending into both the warm and cold latitudes and 
from the Atlantic to the Pacific, with richness of soil, 
varying altitudes and a salubrity of climate unsur- 
passed, nearly all of the most useful forms of animal 
and vegetable life, even if not indigenous, find a fitting 
place of abode within its borders, and may be produced 
in great abundance. 

Not only may all necessary, as well as most forms of 
animal and vegetable life be produced here abundant- 
ly, but upon the surface and locked up in the bosom 
of the earth, within the reach of man, there is an unlim- 
ited supply of water, coal, iron, oil and nearly all, if 
not all, of the useful minerals and metals. 

No such strong, healthy, industrious and intelli- 
gent people of equal number ever before existed in the 



2 FUNCTIONS OF GOVERNMENT. 

world as now in the United States. They are a new 
nation, produced by the commingling of the blood of 
many nations, and by a law of nature greater than any 
of the constituent nations. 

There never was a period of activity anywhere in the 
world approximating that in the United States within 
the last thirty years. Nowhere has there ever been 
such appliances and means of production, including 
transportation, as are here now. 

The form of the United States government is gen- 
erally admitted to be better than that of any other con- 
siderable nation. It is certainly well adapted to sup- 
port a government with sufficient efficiency to protect 
the rights of its citizens and maintain them equal, with 
reasonable economy. 

But notwithstanding we have had no general calam- 
ity of earthquake, disease, or war; notwithstanding 
the fact that the sun continues to shine, the rain to 
fall, and the winds to blow; notwithstanding our form 
of government, our natural advantages; notwithstand- 
ing that ours now is a higher civilization than ever be- 
fore graced the world, still here in the United States 
there is neithev general prosperity in industrial matters 
nor happiness of its people, but, on the contrary, gen- 
eral adversity and unhappiness. 



INTRODUCTION. 3 

This lamentable condition of things exists notwith- 
standing the country as a whole is only sparsely set- 
tled. There is, practically, no limit to the population 
that the United States may sustain. When we con- 
sider that the whole present population of the United 
States, and more besides, could be domiciled and 
wholly sustained within the borders of any one of sev- 
eral of the single states of the United States, we can 
form some conception of the almost unlimited popula- 
tion that the United States is able to support. 

This condition has not suddenly come upon us, but 
by degrees, through a course of years so long that 
many, despairing of success, have become professional 
beggars and tramps. A large element of our popula- 
tion^ ^till willing and anxious to work, not yet without 
hope, not yefc professional tramps, is unable to ob- 
tain employment, or, at the most, only at rare and ir- 
regular intervals. Another large element is at work 
for others, but the members thereof receive as compen- 
sation barely enough to enable them to supply them- 
selves and their families with the necessaries of life, 
but not enough to enable them to better their own 
condition or to educate their children. For years this 
last class has increased in numbers faster in propor- 
tion than population has increased; and from this 



4 FUNCTIONS OF GOVERNMENT. 

class the army of the unemployed is recruited, and it 
in turn recruits the army of tramps. 

There has heen, and still is, another large army of 
men engaged in business for themselves, but depend- 
ent for patronage upon those already mentioned; and 
as the condition of their patrons has gradually grown 
worse, so have they gradually miade less and less, lost 
more and more, and from their ranks men have contin- 
ually fallen into the ranks of those dependent upon 
others for their emloyment, destined to become 
tramps. 

So it is up through the different grades. Some evil, 
or evils, existing, the lowest grade of men first felt the 
effects, and thereafter different grades suffered in regu- 
lar order, from Ihe lowest toward the highest, a large 
majority of our people being affected. 

The evils have not been suffered without complaint, 
but at no time were the complaints of those of any 
grade believed or heeded by those of upper grades; 
but instead those who made the complaints were called 
"calamity howlers" or other reproachful names; the 
existence of any evil was denied, and the condition of 
those who complained was charged to their own folly. 

While the presence of any evil was denied by many, 
there was little hope of relief; but now that a majority 
have experienced the injurious effects, and the exist- 



INTRODUCTION, 5 

ence of the evil is acknowledged by them, there is hope. 
The best sign of the times is that it is now admitted by 
a majority of our people that something is wrong, for 
there, is, of course, an equal demand that the evil be 
determined and remedied. 

The nature of the evil is still an issue. As many 
remedies are suggested as there are different ideas of 
the evil. That general permanent prosperity and hap- 
piness will not return until the true remedy is applied, 
must be evident to all. The subject of paramount im- 
portance, then, to this nation is the discovery of the 
exact nature of that which has brought about these 
hard times, its cure, or its removal. 

In trying to solve a problem that involves the per- 
petuity of our institutions and the happiness of man- 
kind, it seems needless to say that all should be un- 
prejudiced, unbiased, unselfish and impartial, as in 
no other state of mind can the truth be ascertained, or 
recognized if discovered. 

Even those who may have benefited by the suffer- 
ings of others should realize that for selfish reasons 
alone they should not oppose a solution of the problem, 
for in the end their best interests would be subserved. 
It cannot be supposed that a government will be per- 
petuated under which a people as intelligent as those 
of the United States suffer considerable injustice. 



6 FUNCTIONS OF GOVERNMENT. 

If what has already been said is true, that our la- 
mentable condition is not attributable to any stingi- 
ness of nature, to any evil in the form of our govern- 
ment, to any difficulty inherent in our people, the 
fault, then, must be in the government itself as ad- 
ministered. It must be that not enough laws are ad- 
ministered or that those that are administered are bad 
laws. The condition must be the result of nonfeas- 
ance or malfeasance upon the part of our government. 

By a solution of the question what the government 
should do and what it should not do — that is, what are 
the proper functions of our government — and by a 
comparison of the answer with what has been and is 
being done by our government as administered, the 
evils that have caused our troubles will become clear, 
and a remedy can be applied. Then if the govern- 
ment lives up to its best knowledge, a repetition of ills 
from the same causes at least will not occur, but, in- 
stead, our people will go forward in the enjoyment of 
all those blessings so bountifully spread by nature. 

It is not contemplated to treat exhaustively of the 
functions of government, but only sufficiently to dis- 
cover the main evil, or evils, which have caused our 
present condition, and to suggest the course to pursue 
to avoid a repetition of the same errors. This is done 
in the belief that if we put into practice what we shall 



INTRODUCTION, 



discover, that, though we may make other slight mis- 
takes, no other evils await us of sufficient importance 
and influence materially to retard or deflect us in our 
march of progress. 



CHAPTER TI. 
THE QUESTION STATED. 

There are people who contend that government is 
neither necessary nor desirable. They are, therefore, 
called anarchists. 

There are others commonly called socialists; these 
are diametrically opposed to the view of the anarch- 
ists, and contend that not only is government neces- 
sary and desirable, but that a government should ex- 
ercise the usual functions, and in addition thereto em- 
ploy all labor and manage all industries. 

The existence of any government is declared an 
evil by the anarchists, while the failure by govern- 
ment to supplant the individual in the employment of 
labor and the management of industries is declared 
by the socialists to be a grievous mistake. 

Others less radical, taking a position between these 
extremes, contend that every society should have a 
government, thus differing from the anarchists; but 
differing also from the socialists, they deny that it 
would be desirable to have that government exercise 
all of the functions that socialists maintain that it 
should exercise. 



THE QUESTION STATED. 9 

So far as the writer's information extends, neither 
the opinions of the anarchists nor the socialists ever 
have been or now are dominant, but instead every con- 
siderable society has had, and now has, some govern- 
ment ; but no government ever has been or now is con- 
ducted upon complete socialistic principles. In this 
respect, there is no difference between the past and the 
present. As a resultant of these opposing views the 
course of every government is between the extremes; 
while every government does much, it leaves much 
to be done by the individual. 

Owing to this contrariety of opinion, there are un- 
der all civil t;'overnments at least two political parties; 
and as long, at least, as people differ in opinion as to 
what the proper functions of government are, so long 
will there be two political parties, one with anarchis- 
tic, the other with socialistic tendencies; one striving 
to lessen the powers of government, one to increase 
them; one opposed to the existing administration, one 
supporting it 

In the United States these two political parties are 
now called the Democratic and the Kepublican. The 
main characteristic of the Democratic party is, and 
ever has been, its opposition to the centralization of 
power; it has ever advocated the preservation of much 
power m the hands of the people, and the exercise cf 



10 FUNCTIONS OF GOVERNMENT. 

but comparatively little by the government The Re- 
publican party, on the contrary, has ever sought to in- 
crease the ])ower of the central, government. 

Neither party has at all times been rational or con- 
sistent, but the Democratic party has been generally 
anarchistic in its tendencies, while the Republican 
party has been generally socialistic. Our legislation 
is the resultant of these two opposing forces. There 
is no presumption that the legislation has been right, 
or that either party has been right. No one will assert 
that our government in all things has been judicious. 

Before we consider what the proper functions of 
government are, it must first be determined whether 
or not the anarchists are correct — whether or not an;v 
government should exist. Then, should it be deter- 
mined that government is desirable, the question prop- 
erly arises, v»hat is its proper course? Are the opin- 
ions of the socialists correct, or does the wise course lie 
between these extremes? If so, where is its exact lo- 
cation, and what landmarks may be established to 
guide a government? What should it do and what 
should it leave for the individual to do? What, if any- 
thing, has government to do with land? What is its 
concern with money? Should it operate the railroads 
and telegraphs? Should it supply gas and water to 
cities? If the city should not buy and sell fuel should 



THE QUESTION STATED. 11 

it weigh and measure it for the buyer and sell'j»? 
Should the goYernment interfere with trade? llow 
£ire the expenses of government to be borne? 

These specific questions indicate to a certain ex- 
tent the nature of the inquiry, what are the proper 
functions of government? We seek a principle that 
will enable us to answer the foregoing and similar 
questions that may arise in the operation of any gov- 
ernment, if it be determined that governments are 
necessary or desirable. 

It is self-evident that all power exists originally in 
the people. Government is created by the people, and 
whatever powers it possesses are delegated to it by 
the people; the more the power vested in the govern- 
ment the less remaining in the people to be exercised 
by them in their individual capacities; then certainly 
in determining the proper functions of government, 
we determine the rights of the people as against the 
duties of the State, 

The question is one of transcendent importance; it 
concerns every individual. Should a government fall 
to do what it ought to do, not only the property, but 
the very life of every citizen may be endangered. 
Should it do more than it ought, it may deprive its 
citizens of that liberty most essential to progress. The 
destiny of the human race depends upon the conduct 



12 FUNCTIONS OF GOVERNMENT. 

of government. Though even the preservation of all 
knowledge depends upon the conduct of government 
upon scientific principles, it is an acknowledged fact 
that the science of government has not kept pace with 
the other sciences. 

The importance of the question asked must be real- 
ized to arouse that interest necessary to a proper solu- 
tion of it and induce obedience when solved. 

In this country, when government action has been 
proposed, people have been content to ask of its con- 
stitutionality. But the question asked is not simply a 
question of what the government may constitutionally 
do, as constitutions are now formed, though there is 
great latitude for action within the lines of our present 
constitutions, but rather the question seeks the correct 
course of government regardless of present constitu- 
tions and under constitutions only that are absolutely 
correct. 

In the United States, before the creation of the 
general government, sovereign states existed, but 
in creating this government, by adopting the federal 
constitution, the states surrendered certain powers' 
and vested them in the general government. The gen- 
eral government may constitutionally execute any of 
the powers thus given to it by the states, and none 
other. The present states of the Union have written 



THE QUESTION STATED, 13 

constitutions, and a state government may constitu- 
tionally do everything the power to do wMcli was not 
surrendered to the general government by the adop- 
tion of the federal constitution, or is not prohibited by 
the state constitution. Acts of government v may be 
constitutional, and yet unjust. What is constitu- 
tional may not always ba just, and Yice rersa— -what is 
just may not always be constitutional. It may be un- 
just for our governments to do all that they may con- 
stitutionally do, and it may be desirable for them to do 
things that they may not constitutionally do. 

After the proper functions of government are as- 
certained the constitutions may be so amended, if nec- 
essary, as to permit governments to perform their 
proper functions. But the existence of constitutions 
should not at any time lead people into such a feeling 
of security as to bar all inquiry into the merits of gov- 
ernmental action. Constitutions are not infallible. 

The question is, what are the proper functions of 
government? 



CHAPTER III. 

RIGHTS OF INDIVIDUALS IN A SOCIETY WITH- 
OUT A GOVERNMENT. 

In the foregoing chapter it was stated that the sub- 
ject of the proper functions of government involves the 
rights of citizens as against the duties of the state. 
Whatever powers are not delegated to the state, but re- 
tained bj the people, it is the privilege of the people 
to exercise or not, as they will. That is a privilege, 
not a duty. As to the government, it is its duty to 
exercise all of its functions when occasions arise, 
otherwise the reason for the existence of government 
would cease. Individuals would not surrender their 
powers to be exercised only at the caprice of the gov- 
ernment. When an occasion arises for the doing of a 
certain thing, it might better be done by the individual 
than not at all. Everything must be accomplished 
either by the citizen in his private capacity or by the 
government. 

It is, therefore, the duty of the government to do 
what it is empowered to do, and the privilege of in- 
diyiduals to do what they have not empowered the 
government to do. If the duties of the government 



RIGHTS OF INDIVIDUALS IN A SOCIETY, ETC. 15 

be ascertained the privileges of the citizen would 
thereby also be ascertained, and vice versa. 

Government is a creature of society; society must 
exist before a government is possible. We must con- 
sider the rights of individuals in a society, without a 
government, before we can ascertain the reasons for 
the creation of government, if any there be. 

A society consists of two or more individuals sit- 
uated so closely together upon the earth that they may 
interfere with each other in the unlimited exercise of 
their powers. Regardless of all theories relative to 
the creation of man, and regardless of all theories and 
evidences of history relative to the manner of the for- 
mation of societies, we may suppose a man upon the 
earth before society was formed or beyond the pale 
of society. To ascertain the rights of individuals in 
society without a government, we must first ascertain 
the rights of individuals outside the pale of society, as 
those are man's full natural rights, and then see how 
these are affected by bringing men into society. 

Once created, man became conscious of his exist- 
ence. Man has power to see, to hear, to smell, to taste, 
to feel, to move, to think. Once created, he became, 
and lias ever remained, an independent agent. As a 
free agent he had the right to exercise any or all of his 
powers or not, as he willed. Alone, he had a right to 



16 FUNCTIONS OF GOVERNMENT. 

live while his powers lasted, or to kill himself if he 
would and could. He had the right to move or not; 
he had the right to go wherever his powers might en- 
able him to gOj or to remain in one place; he had the 
right to utilize as much of the earth and its products 
as he could and chose to do. His wages were the full 
product of his labor; anything- within his powers he 
had the right to do; his rights were limited only by 
his powers. These rights arose from his opportunity; 
they existed because he was an independent agent, the 
opportunity existed, and he was without obligation to 
any man but himself. 

We may suppose one man alone upon the earth. 
Now, suppose others upon the earth, each alone as the 
first; the rights of each would be the same as those 
of the first supposed. Their natural powers would 
differ; no two men are of exactly equal powers. All 
men are not created equal in abilities. Each would 
have the right to the full product of his powers, such 
as they were. Because of different abilities they would 
share differently, each in proportion to his ability, 
but this is not a cause of complaint as between man 
and man. In one thing only are they equal, namely, 
each is equally entitled to the full product of his own 
powers, i. e., each has equal right to do as he wills 
within his powers. These are the complete natural 



RIGHTS OF INDIVIDUALS IN A SOCIETY, ETC. 17 

rights of man, and the basis of his rights in society 
with or without a government. 

Kow, suppose these individuals with their unequal 
powers, but equal rights to the full product of their 
labor, to come and remain in such close proximity that 
they may interfere with each other in the unlimited ex- 
ercise of their powers; a society would* thereby be 
formed; a government is then first made possible; but 
we are primarily concerned in ascertaining the rights 
of individuals in society without a government, in or- 
der to discover whether or not there is any reason for 
the organization of a government. 

What effects are produced by the formation of so- 
ciety upon the natural rights of men? It must 
be clear that it cannot affect the equality of their 
rights. The coming together of men cannot naturally 
give to one a right that it does not give to every other 
man ; it cannot give to one a right to a share or to the 
whole of the product of another's labor ; it cannot give 
to one the right to kill another. Their rights must 
still remain equal, whether the rights of each are 
limited or extended by the formation of society. If 
society increases the pow^ers of an individual he must 
still be entitled to the full product of that increased 
powder; if it lessens his powers he is only entitled to 
the product of that lessened power. That is so of each 
and every one. 



18 FUNCTIONS OF GOVFRNMENT. 

But are the natural rights of each and all neces- 
sarily affected? Alone, each had the right to go where 
he willed, stay where he willed, to appropriate any 
product of nature that he willed. Suppose now, in 
society, that two or more willed to go over the same 
place at the same time, or to stay in the same place 
at the same time, or to appropriate the same product 
of nature; and suppose that, though the powers of each 
differed, yet the powers of each were sufficient to en- 
able him to accomplish what he willed in the absence 
of the others. The result would be that no one could 
exercise his will in the regard supposed without viola- 
tion of the rights of others, and the rights of each being 
equal, all must refrain from doing the thing until some 
adjustment be made. 

To make a specific illustration of what might occur, 
suppose that in the locality where the society formed 
there was only one supply of water, and that from a 
spring which previous to the formation of the society 
any one had the right to appropriate entirely. Would 
any one now in society have the right to possess ex- 
clusively the same? No one would have a right to 
do a thing that would exclude others from doing it, if 
they willed to do it, and had sufficient power to do it. 
The fact that one might have sufficient power to en- 
able him to do it to the exclusion of others would give 



RIGHTS OF INDIVIDUALS IN A SOCIETY, ETC. 19 

him no right to do it. The rights of the strong are 
no greater than those of the weak. Though, if in a so- 
ciety there was a thing that all would like to do, but 
only one possessed sufficient power to do it, the one 
would have the right to do it ; for in doing it he would 
not violate the rights of others, as no one has a right 
to do what he cannot do. 

In order, then, to keep the rights of each equal in 
society without a government, the natural rights of 
each are necessarily affected by being limited; and no 
one would have a right to do at a certain time what 
others had power to do and willed to do at the same 
time, provided all could not enjoy the right at once; 
but every one would have the right to do as he would 
and could, provided that in the doing of the same 
other individuals would not be denied an equal right 
to do the same thing, or, to put it differently, the 
rights of each would be limited by the equal rights 
of all others. 

The rights, and the limitation of rights, of in- 
dividuals in a society without a government now hav- 
ing been determined, it will be an easy matter to deter- 
mine to a certainty whether or not the anarchists are 
right, i. e., whether or not a government is necessary 
or desirable. 



CHAPTER IV. 
THE POSITION OF ANAEOHISTS UNTENABLE. 

It will be remembered that in tbe previous cliapter 
it was determined tbat outside of society tbe rights 
of each were unlimited and equal, and in society the 
rights of each were limited alike, that the rights 
might remain equal. 

It is a fact that no considerable contiguous area of 
the surface of the earth is invariable in quality. In 
any considerable area some places are much more de- 
sirable than others. 

It is certain that it would be the most desirable 
places where the society is situated, where the desire 
to stay by more than one at the same time would first 
arise, and whereupon the most people would desire to 
stay at the same time; and it is equally certain that it 
would be upon the same places where conflicts would 
first and most frequently arise among those desiring to 
travel. 

In the absence of some agreement, the most desir- 
able places could not be occupied by any one without 
the infringement of rights. Each having an equal 
right to occupy the most desirable place, and it being 



THE POSITION OF ANARCHISTS UNTENABLE. 21 

impossible for two persons to occupy the same place 
at the same time, in order to maintain the equal rights 
of individuals, none could occupy the most desirable 
place, and resort would necessarily be made to other 
places, and would be made to the next best place, 
where the same conflict would arise, and where again, 
for the same reason, no one could enjoy the right to 
stay or travel, and again resort would be made to the 
third best place, and so on down through all the grades 
of land until, in order for individuals to exist at all, 
with equal rights in the absence of an agreement, they 
would be obliged to dissolve the society; that is, sep- 
arate, going to different parts of the earth, that there- 
after no conflict might arise. 

To avoid this dire result — the very dissolution of 
society — and enable some to occupy more desirable 
places than others; some to occupy the best places, to 
the exclusion of others with equal rights, and still 
maintain the equal rights of individuals, some agree- 
ment providing a just compensation by those per- 
mitted to occupy the best places to those consenting 
to take the poorer places would have to be made, even 
if that would accomplish it. 

It should be observed in this connection, and be- 
fore going further, that, strictly speaking, even the sys- 
tem of compensation just suggested would not main- 



22 FUNCTIONS OF GOVERNMENT. 

tain the former equality of the natural rights of all; 
strictly speaking, that equality of necessity is de- 
stroyed when some are permitted even by agreement 
to occupy the best places, to the exclusion of others, 
and the system of compensation seeks, as far as pos- 
sible, as the only alternative to the dissolution of so- 
ciety, to re-establish equity, of necessity destroyed in 
the formation of society. 

But such an agreement for compensation would 
constitute a government for the members thereof, and 
if an agreement could accomplish the re-establishment 
of equity, these considerations show that government 
is absolutely essential to the maintenance of society 
with the rights of its individuals remaining substan- 
tially equal. 

Anarchy, then, either demands the dissolution of 
society or the maintenance of unequal rights among 
men in society. 



CHAPTER V. 

THE POSITION OF THE SOCIALISTS UNTEN- 
ABLE. 

It must not be forgotten that the first reason justi- 
fying a government, as shown in what precedes, con- 
sists in the consideration that without a government 
society with equal rights of its members is impossible. 

The making of the agreement referred to in the 
former chapter constitutes the formation of a govern- 
ment; and as the reason justifying its formation dic- 
tates its function when formed, the next detail de- 
manding consideration is the terms of agreement es- 
sential to accomplish the purpose for which the same 
is intended. 

What agreement will re-establish and preserve sub- 
stantial equality of rights of its members, of necessity 
destroyed in the formation of society? 

In considering such an agreement the law of free- 
dom, of growth, of development, of civilization, of 
progress, must not be disregarded, else all efforts of 
mankind will be futile. We are not born developed in 
any respect, and no part of man, either body or 
mind, will grow without exercise. If at any stage of 



24 FUNCTIONS OF GOVERNMENT, 

development all exercise is stopped and absolute rest 
imposed upon a man, not only will development stop, 
but decay and death ensue. TMs is a law of nature. 

For the best development of man the exercise of all 
his parts should be symmetrical, co-extensive. Exer- 
cise of muscles does not cause development of mind, 
nor of mind of the muscles, except as the exercise of 
one necessarily and incidentally exercises the other. 
Without great freedom of both mind and body there 
cannot be that exercise essential to the full develop- 
ment which makes civilization possible and leads ever 
on to greater accomplishments. 

Absolute freedom such as exists outside the pale of 
society is not possible within society if equality of 
rights is to abide within; for we have already discov- 
ered that one controlling agreement must be made to 
make both society and equality possible, but the very 
law of life and growth of man must be violated as lit- 
tle as possible, and only when necessitated by superior 
considerations. 

A condition of unbounded freedom, which only ex- 
ists beyond the pale of society, is not the condition 
most conducive to exercise; otherwise we would ex- 
pect the greatest growth of mind and body in per- 
sons furthest removed from the centers of society and 
affected the least by government, and in those who 



THE POSITION OF THE SOCIALISTS UNTENABLE. 25 

meet and conflict the least with other men, while the 
reverse is true, greatest development being in the cen- 
ters of society, even as governments are now conduct- 
ed. Much can be accomplished by men working joint- 
ly that cannot be accomplished by them working sep- 
arately and alone; therefore, the best conditions for 
development are, as much freedom as possible consist- 
ent with the greatest opportunities which society fur- 
nishes, but which are almost entirely wanting outside 
of society. 

Where there is the greatest amount of exercise, 
that is, where there is the greatest freedom, together 
with the greatest opportunities, there will be the 
greatest progress. Outside of society with unrestrict 
ed freedom, but with comparatively few opportunities 
development is slight; and in society without freedom 
development is also slight, as the condition of en 
slaved people illustrates; but with comparative free 
dom in society where opportunities are numerous 
there does history show has been the greatest progress 

The more unlimited the freedom and the greater 
the opportunities, the greater will be the development 

So that in the making of any agreement to re 
establish equity of necessity destroyed in the forma 
tion of society by establishing permanent possession of 
land, which is a necessary condition of a permanent 



26 FUNCTIONS OF GOVERNMENT. 

society, the liberty of individuals should be restricted 
only so far as necessary to the maintenance of an 
equality of rights, that is, so far as necessary to ac- 
complish the purpose of the agreement. 

Socialists would create a government and have it 
employ all labor and direct all industries. Under this 
or any other system the total product could not be di- 
vided equally among laborers without violating that 
-natural right of each to the full product of all of his 
labor, which is the mainspring of all action. But suf- 
fice it to say in objection to this system, even if under 
it the highest official and the most humble laborer 
were paid in proportion to the value of what he did, 
if that were practicable, it transgresses that natural 
law of personal freedom so essential to progress. Un- 
der such a system all except the very head of the gov- 
ernment would be subordinates, subject to orders from 
superiors and without freedom of thought and action. 
This system would be preferable to a state of anarchy, 
but does not seem to constitute such a state of perfec- 
tion as to dissuade us from attempting to find a bet- 
ter one. 

Before presenting a just system it may not be with- 
out value to show fatal objections to other systems 
that might occur to a person in attempting to devise 
the proper one. 



THE POSITION OF THE SOCIALISTS UNTENABLE. 27 

No system whereby the people would alternately 
occupy the best and poorer places of the locality could 
be accepted, for as soon as the society became of any 
considerable size more time would be consumed in 
making changes of possessions than in performing 
labor; besides, permanent possession of land is neces- 
sary to permanent improvement, and this is essential 
to the accumulation of wealth, without which there 
cannot be that rest from physical labor necessary to 
cultivate the mind and produce that symmetrical de- 
velopment, which is the secret of civilization. 

The quality of the soil differing in different places, 
the locality of the society could not be divided into equal 
parts, giving one to each member and thereby pre- 
serving the equality of rights of individuals; more- 
over, the fact that the number of the members of so- 
ciety would continually change would necessitate a 
constant redivision, and this would destroy permanent 
possession so essential to civilization. 

We have now discovered that the positions of both 
the anarchists and the socialists are untenable, that 
a government is not only desirable and necessary, but 
that the government when formed should not employ 
all labor nor direct all industries. The true course of 
government therefore lies between the two extremes. 



28 FUNCTIONS OF GOVERNMENT. 

Its exact and only function, so far as the matters al- 
ready considered are concerned, is to establisli the per- 
manent possession of land upon equitable principles, 
and thereby render society peaceful, stable and bene- 
ficial to the human race. 



CHAPTER VI. 
THE FIRST FUNCTION OF GOVERNMENT. 

To the task of explaining a just system — one that 
will re-establish substantial equity and grant the 
greatest possible degree of personal freedom consist- 
ent therewith — we shall next devote ourselves. To 
make it easy of comj)rehension, we shall proceed by 
illustration. Illustrations involving large numbers are 
more difficult to comprehend than like illustrations 
with smaller numbers. Then let us assume a world 
containing but one hundred acres. The one hundred 
acres of land, to make the illustration similar to the 
real earth, must be variable in quality. Suppose 
twenty-five acres to be of equal quality; twenty-five 
acres to be one grade poorer than the first twenty-five 
acres supposed, but alike in quality; twenty-five acres 
to be the same also, but to be two grades poorer than 
the first, and each of the last twenty-five acres to be 
three grades poorer than the first, and all of equal 
quality. 

To simplify the illustration, let w^heat be the only 
product. Suppose the acres of the first grade yield 
twenty-five bushels per acre per year; of the second 



30 FUNCTIOm OF GOVERNMENT. 

grade, twenty -four bushels; of the third grade, twenty- 
three bushels, and of the fourth grade, twenty-two, 
with the same amount of labor, and that, too, the labor 
of one man. Suppose one acre is all that one man can 
cultivate advantageously, and that in the course of a 
year one man can cultivate it as advantageously as 
two could. Suppose also that when the contrary is 
not specified, by a man is meant an ordinary man, one 
-that would accomplish as much as an average man of 
all the men of any given community. 

Suppose one man to appear upon this imaginary 
earth of one hundred acres; reflect upon his full nat- 
ural rights hereinbefore discussed. 

What would he do? He would pick out one acre 
of the best land, upon which in one year he would pro- 
duce twenty-five bushels of wheat. What he produced 
would all be his. He would possess his natural rights 
unlimited. 

Suppose now another man appears, what would be 
his rights? He certainly should not dispossess the 
first man located, for there is equally good land left; 
nor share in any of the improvements that the first 
man may have made upon his land, because each is 
entitled to the full product of his labor. There are 
twenty-four acres equally as good as the one upon 
which the first man is located, and he may take any 



THE FIRST FUNCTION OF GOVERNMENT. 31 

one of the twenty-four acres left, and have as gr^at ad- 
vantages as the first man. Under these circumstances, 
should the second man so decide to do, and should both 
men voluntarilj refrain from trespassing upon the 
other's possessions, no agreement of any kind would 
be necessary to preserve the natural equality of rights, 
so far as the matter now under consideration is con- 
cerned, unless such voluntarily imposed restrictions 
should be considered in the nature of an agreement. 
In this manner a third man can come, also a fourth, 
and so on up to and including the twenty-fifth man; 
and there would be no disadvantage arising from the 
order of their coming, for there would be left for each 
as he came all that he could advantageously use of the 
best land. The rights of all would remain equal with- 
out an agreement, though the natural right of each to 
locate or travel anywhere would be restricted to the 
extent of the previous locations. 

But suppose a twenty-sixth man to be created, 
what about him? The best land left unoccupied is 
only of second grade, and will produce only twenty- 
four bushels to the acre, while each of the first twenty- 
five men have land that will produce twenty-five bush- 
els per acre. 

The natural rights of all the men upon the earth 
are equal, without regard to when born or where 



32 FUNCTIONS OF GOVERNMENT. 

born, qualified, however, perhaps by the considerations 
advanced in the second preceding paragraph relative 
to priority of location. No- one creates himself; no one 
crowds himself in whether he is wished or not. All 
are created by the same force, and are subject to the 
same natural laws. Men differ only in the extent of 
their powers; their natural rights are equal. 

The twenty-sixth man has a right to have equally 
as good land as the first twenty-five men, or if the only 
considerations which render society possible prevent, 
then at least an equivalent. 

There being no land left as good as the first twenty- 
five men possess, and permanent possession of land 
being essential for reasons hereinbefore stated, the 
twenty-sixth man must accept an equivalent. The first 
twenty-five men must share their advantages with him 
in order to equalize their rights, and the share thus 
obtained from them will be his equivalent. 

An agreement, i. e., a government, is now necessary 
in order to secure permanent possession of land, ren- 
der society possible, and preserve an equality of 
rights. 

What agreement, having regard to personal free- 
dom, will accomplish this end? 

The total product of the twenty-six acres would be 
six hundred and forty-nine bushels. In equity each is 



THE FIRST FUNCTION OF GO VE^NMENT. 33 

entitled to one-twenty- sixth of tlie whole, which is 
twenty-four bushels and twenty-five twenty-sixths of a 
bushel. Those upon the best land would each have 
one-twenty-sixth of a bushel too much, and the one 
man upon the second grade land would have twenty- 
five twenty-sixths of a bushel'too little. By each one 
upon the best land giving to the one upon the second 
grade land one-twenty-sixth of a bushel, then each 
and all would have alike, to-wit, twenty-four bushels 
and twenty-five twenty-sixths of a bushel. 

Suppose twenty-four other men to appear and each 
settle upon an acre of the second grade land, which 
would then all be occupied. The total product of the 
land thus far occupied would be twelve hundred 
twenty-five bushels. There would then be fifty men, 
and each entitled to one-fiftieth of the whole. One- 
fiftieth of twelve hundred twenty-five bushels is 
twenty-four and one-half bushels, the amount each 
should have ; then each man upon the best land would 
have to contribute one-half of a bushel to each man 
upon the second grade land; now each would have 
twenty-four and one-half bushels, his just share. 

When more men appear, and are compelled to take 
third grade land, which would yield, it will be remem- 
bered, only twenty-three bushels per acre, they would 
be at a disadvantage of twc> buehels per acre, as com- 



34 FUNCTIONS OF GOVERNMENT. 

pared with those upon the beet land, and of one bushel 
per acre, as compared with those upon the second 
grade land. To equalize the rights of all, they should 
receive something, and the others contribute some- 
thing. To ascertain the amount, divide the total prod- 
uct by the total number of people, and the quotient 
will be the amount of the whole that each should re- 
ceive. Then those upon land that yielded more than 
th^ average, must contribute their excess; and those 
upon the land that yielded less than the average, are 
entitled to receive as much as the difference between 
what they raise and the average amount. To illustrate 
again, suppose there were fifty-one men. The first 
twenty-five men raise six hundred twenty-five bushels, 
the second twenty-five men raise six hundred bushels; 
the fifty-first man raises twenty-three bushels; and the 
total product is twelve hundred forty-eight bushels, one 
fifty-first of which is twenty-four bushels and twenty- 
four fifty-firsts of a bushel, the amount each should 
have. Twenty-five bushels, the amount that each upon 
the best grade land produces less twenty-four and 
twenty-four fifty-firsts bushels, the amount each should 
have, equals twenty-seven fifty-firsts of a bushel, the 
amount that each upon the best grade land should con- 
tribute. The difference between twenty-four and twen- 
ty-four fifty -firsts bushels, the amount each should have, 



THE FIRST FUNCTION OF GOVERNMENT. 35 

and twentj-four bushels, tlie amount that each upon 
the second grade land produces, is twenty-four fifty- 
firsts of a bushel, the amount that each upon the sec- 
ond grade land should receive. The difference between 
twenty-four and twenty-four fifty-firsts bushels, the 
amount each should have, and twenty-three bushels, 
the amount that the fifty-first man would raise, is one 
and twenty-four fifty-firsts bushels, the amount that 
the fifty-first man should receive. 

The principle of the agreement that would have to 
be made to equalize rights is now clear, at least until 
one hundred men appear and all the land is as thickly 
settled as can be advantageously worked. What then? 
If the total product would sustain over one hundred 
people some further system would have to be resorted 
to, to equalize rights ; but there is no use of theorizing 
as to what should then be done because the time is so 
far distant in the future when, if ever, so many people 
will exist at one time upon our real earth that they 
cannot all work at one time advantageously; and if 
the time does arrive, the men of that day will be able 
to establish and maintain equity if the government is 
carried up to that time upon equitable principles. We 
have now discovered what agreement will maintain the 
equal rights of men, so far as the matter under consid- 
eration is concerned. 



36 FUNCTIONS OF GOVERNMENT, 

We know that wMle the natural rights of individu- 
als are equal, their powers differ, and that because the 
natural rights of individuals are equal, each, working 
without undue advantages over others, is entitled to 
the full product of his labor, whether it be little or 
much. But all men are not ordinary men; some men 
can do more, others not as much as an ordinary man. 

Suppose a man of more than ordinary ability to 
have settled upon one of the acres of the best grade 
land and by reason of his unusual ability he could raise 
on it thirty bushels in one year instead of twenty-five 
bushels only, the amount an ordinary man could raise. 
Because the extra five bushels are the result of his ex- 
traordinary labor and not of greater advantages, he 
should contribute no more as a condition of occupying 
the best land than if he had raised only twenty-five 
bushels. Suppose this extraordinary man to have set- 
tled upon one of the acres that by the labor of an or- 
dinary man would yield only twenty-two bushels per 
acre per year, but by his labor would yield twenty-sev- 
en bushels. Because his increased production is the re- 
sult of his additional labor he should receive contribu- 
tion as surely and as much as an ordinary man would 
receive if he occupied the same land and raised only 
twenty-two bushels upon it. 



THE FIRST FUNCTION OF GOVERNMENT. 37 

Suppose a man of less tlian ordinary ability to oc- 
cupy an acre of the best land and that he is able to pro- 
duce thereon only twenty bushels instead of twenty- 
five bushels, what an ordinary man would produce. 
Certainly in justice to all others he should contribute 
as much as an ordinary man would have to contribute, 
if such occupied it, and if such an. inferior man occu- 
pied one of the poorest acres he should receive no more 
than an ordinary man would receive if he occupied it. 

The reader has probably already questioned the 
practicability of making the transfer from those who 
must contribute to those who must receive. It certainly 
is not impracticable for the citizens of a nation to con- 
tribute to their government, for that is done now under 
every government, in the payment of taxes. 

Let us see if the necessity of direct re-distribution 
cannot be avoided, and if that which appears to be ab- 
solutely just be not susceptible of accomplishment. 

None of the first set of twenty-five men arriving 
subsequently to the others of their number, would give 
any of their predecessors anything to occupy the land 
occupied by their predecessors; for there remains for 
each, as he arrives, as much as he can advantageously 
till and as good land as that held by his predecessors. 

But when any of the second set of twenty-five men 
arrive, it would be different with them. The best land 



38 FUNCTIONS OF GOVERNMENT. 

that is left for them will yield only twenty-four bushels 
pre acre. They would be just as well off if they should 
rent from one of the first twenty-five men his acre and 
pay him one bushel per acre for rent as they would be 
to till one of the best acres left unoccupied without 
paying rent. 

It is thus seen that as soon as the best land is all 
taken and other people arrive, that rent of the best 
land arises, and equals the amount of the excess of its 
products over what the product of the best unoccupied 
land would amount to were it tilled. 

A man arriving after the whole of the first and sec- 
ond grade land was taken, could afford to pay any one 
upon the best land two bushels per yea*', or any one 
upon the second grade land one bushel per year, as 
rent to till their land. He would be as well off at the 
end of the year as though he took the third grade 
land, the best unoccupied, and worked it without pay- 
ing rent. 

It is thus seen that as population increases, rent 
for poorer land arises and rent for better land in- 
creases. 

Now, instead of those upon the land that is better 
than the poorest land in use contributing just enough 
of their excess product that when it is added to the 
product of the poorest land in use the share of each is 



THE FIRST FUNCTION OF GOVERNMENT. 39 

equal, suppose that a common fund be created, and 
that those upon the poorest land in use contribute 
nothing to it, and that those upon better land contrib- 
ute to it the amount of their excess of product over the 
product of the poorest land in use. That is, suppose 
all the land upon our earth of one hundred acres is oc- 
cupied, and those upon the land that yields twenty-two 
bushels per acre per year contribute nothing; those 
upon the land that yields twenty-three bushels per acre 
contribute one bushel per year; those upon the land 
that yields twenty-four bushels per acre contribute 
two bushels per year; and those upon land that yields 
twenty-five bushels per acre contribute three bushels 
per year to a common fund; then there is a fund that 
belongs equally to all, and the rights of all are equal. 

If, now, there is a common object to be accom- 
plished and an expense would be incurred in its accom- 
plishment the fund thus created could be used to de- 
fray that expense; and if that expense exhausted the 
common fund then there would be no occasion for a 
re-distribution. The practicability of a re-distribution 
is immaterial. 

It not being the object of this undertaking to con- 
sider exhaustively the subject of the functions of gov- 
ernment, but only to consider a few in regard to which 
much abuse exists, I shall not undertake to show, but 



40 FUNCTIONS OF GOVERNMENT. 

shall assume and presume that the readers hereof will 
assume that a government in exercising its legitimate 
functions, whether few or many, will exhaust its reve- 
nue, created as is this fund, in imposing a necessary 
condition to render society upon equitable principles 
possible. 

We have now determined the only conditions upon 
which society can be justly maintained, i. e., we have 
deteri^ined the essential terms of the first agreement 
of society, or, in other words, we have determined the 
first function of government. 

Let us re-state: 

A government should maintain its people in the 
permanent possession of its land, upon the condition 
that those consenting to occupy the poorest land in 
use need contribute nothing for the privilege; that is, 
pay no taxes to the government; but that those upon 
the better land should contribute as much to the gov- 
ernment, that is, pay as much in taxes to it as the value 
of their product exceeds the value of the product of the 
poorest land in use; that is, those upon land better 
than the poorest land in use should contribute in the 
payment of taxes to the government the full extent of 
their advantage derived from being secured in their 
possession of land of greater value than land that 
others are obliged to confine themselves to by reason 
of the previous occupancy of the better land. 



CHAPTER VII. 

THE FIRST DUTY OF GOVERNMENT UNIVERS- 
ALLY NEGLECTED— CONSEQUENT 
EVILS— REMEDY. 

There is no gOYernment on earth that perfectly per- 
forms its first great duty; none that performs its one 
function that first justifies the existence of govern- 
ment, i. e., none that secures permanent possession of 
land upon the equitable principles hereinbefore set 
forth. 

All of the principal governments do secure perman- 
ent possession of land, but not upon the conditions 
that render it just to do so; not upon the conditions 
that those secured in the possession of the land con- 
tribute to the government the advantages accruing to 
them over others by reason of their security of posses- 
sion ; not upon the only conditions that would main- 
tain men's natural equality of rights. True, most gov- 
ernments do collect some taxes upon land values, but 
no such tax approximates the full extent of the ad- 
vantages secured by the possession. 

Let us revert to our earth of one hundred acres, and 



42 FUNCTIONS OF GOVERNMENT. 

compare the taxes tliat each upon it would pay under 
the just system with the taxes that each would pay 
upon it under the prevailing system. 

Upon our earth of one hundred acres under the 
just system the twenty-five men upon the best grade 
land would each pay as taxes to the government each 
year three bushels of wheat, amounting to seventy-five 
bushels; the twenty-five men upon the second grade 
land 'would each pay two bushels, amounting to fifty 
bushels; the twenty-five men upon the third grade land 
would each pay one bushel, amounting to twenty-five 
bushels, and the twenty-five men upon the poorest land 
would pay nothing. The total amount of taxes would 
be one hundred and fifty bushels, and the rights of 
each would be equal. 

Under the prevailing system those upon the best 
land would not pay to the government in taxes three 
bushels each, or seventy-five bushels in all; nor those 
upon the second grade land two bushels each, or fifty 
bushels in all ; nor those upon the third grade land one 
bushel, or twenty-five bushels in all; but instead those 
upon each of said acres of land would pay less than 
their just share, retaining therefore a part of what ac- 
crued to them solely by reason of advantages con- 
ferred by government, instead of by reason of extra- 
ordinary ability; and those upon the poorest land 



THE FIRST DUTY OF GOVERNMENT, ETC. 43 

would be compelled to pay the deficiency, because 
those who enjoyed the advantages paid too little. This 
method destroys the natural equality of the rights of 
men, instead of maintaining them, or, strictly speak- 
ing, of re-establishing them, necessarily destroyed in 
the formation of society. 

Without intending in this connection to discuss 
minutely the evils of the whole prevailing system of 
taxes, to be exact it is necessary to say here that under 
the prevailing system the whole deficiency, as above 
stated, would not be collected of those in possession of 
the poorest grade land, but a part collected of the 
whole population in proportion as the members thereof 
possessed personal property (that is, in proportion as 
they had been capable, industrious and economical), 
or in proportion as they ate, wore, or consumed cer- 
tain articles which might be in proportion to the 
number of their children, or in proportion as they 
were unfortunate in being sick if a tax were levied 
upon an article used as a remedy in case of sickness. 

But in whatever way the deficiency is supplied the 
principle is the same. The failure to make the tax 
equal the advantage permits an injustice, and the pre- 
vailing method of collecting the deficiency magnifies it. 

Perpetuate the injustice from year to year, from 
generation to generation, and from century to century, 



44 FUNCTIONS OF GOVERNMENT. 

even upon our supposed earth, where the difference in 
value between the best and poorest land is but compar- 
atively slight, and ultimately, at a no very remote 
period from the date of the inauguration of the system, 
the difference in the wealth of those deriving an ad- 
vantage and the wealth of those suffering a disadvan- 
tage will be very marked, a just cause of complaint and 
a source of danger to the tranquility of the community. 

As'hereinbef ore shown, it is the increase of popula- 
tion which gives rise to rent. Rent increases as popu- 
lation increases. 

In the illustration no land could command rent un- 
til the twenty-sixth man arrived, then the value of the 
rent of any of the best acres was one bushel per acre 
per year, and when the fifty-first man arrived the value 
of the rent of any of the best acres was two bushels, 
and the value of the rent of any of the second grade 
land was one bushel. 

As rent arises, the value of land arises; and as rent 
increases, the value of the land increases. The value 
of land is but the present worth of future rents. 

The sale of the title of a piece of land is but the sale 
of the right to use the same in the future or to collect 
the future rents of the same. The value of the land, 
therefore, is determined by the value of its rents. As 
the value of the rent of a piece of land depends upon 



THE FIRS7 DUTY OF GOVERNMENT, ETC. 45 

the amount that can be made upon it in excess of what 
can be made upon the poorest land in use that can be 
had for nothing, so the value of the land is determined 
by the amount that can be made upon it in excess of 
what can be made upon the poorest land in use that 
can be had for nothing, whether that which is made 
upon it is made from the soil or made as profits of a 
business conducted upon land that does not involve 
the fertility of the soil at all. Thus land becomes very 
valuable in the centers of cities solely because upon it 
immense sums of money can be made. 

The principle is the same in the illustration as it is 
upon the real earth, but the illustration, by reason of 
the comparatively slight difference in value between 
the best and poorest land, does not show the enormity 
oi the injustice that is done by the prevailing system. 
This system secures to individuals the possession of 
the most valuable land without compelling a contribu- 
tion, commensurate with advantages conferred, for the 
benefit of those who are forced to occupy poorer places 
by reason of the preoccupancy of the best, and the pay- 
ment of the taxes by those enjoying advantages from 
holding land to defray the expenses of government in- 
curred in performing its functions for the benefit of 
all, would certainly accrue to the benefit of those less 
fortunatelv situated. 



46 FUNCTIONS OF GOYERNMBNT, 

Upon our real earth, where some land is valueless 
and other land is pure gold, where cities of millions of 
people exist, in the centers of which immense sums of 
money can be made in trade and in other ways, a fab- 
ulous sum is paid for rent, instead of the three bushels 
per year paid as rent for the use of the best land in the 
illustration. Millions and millions of dollars are paid 
annually in the United States by some persons to oth- 
ers for the privilege of having a place to work and con- 
duct' business; the value of the place for the use of 
which money is paid having been created by the in- 
crease of population, and those who receive the money 
derive an advantage to the extent of the amount paid 
them, to the disadvantage of those paying the money 
who are thereafter subjected to the payment of taxes; 
whereas if the millions paid by those conducting the 
business for the privilege above stated were paid to 
the government instead of to other persons whose 
rights are only equal to theirs, then the rights of all, 
so far as the matters under consideration are con- 
cerned, would remain equal. This condition of things 
is bad enough now, but if the present system should be 
perpetuated, think of the chances, when they become 
of age, of the children born even now, to say nothing of 
those in the future, who shall receive no patrimony. 
Upon the land, then left in the United States that 



THE FIRST DUTY OF GOVERNMENT, ETC, 47 

could be occupied for nothing one would not be able to 
make a living. Even now, while the books at Wash- 
ington may show that the United States government 
still holds the title of great tracts of land, an exam- 
ination of the tracts will show that the land embodies 
the Rocky Mountains and other unproductive lands, 
but no substantial quantity of land upon which a de- 
cent living could be made. Within the last decade, at 
different times, when the government has offered for 
sale portions of Indian reservations supposedly fertile, 
have not the people from all parts of the United States 
rushed to the land office and stood for days in line for 
an opportunity to buy some of the land offered for 
sale? 

When that time arrives those persons will not be 
able to work for themselves without paying somebody 
for the privilege, and that somebody, too, a person 
whose natural rights are no greater than theirs, but 
who, under the present system, is given an advantage 
for which he contributes nothing for the benefit of 
those who are at a disadvantage by reason thereof. 

W^hen that time arrives, in the cities, where land 
values are highest, the owners of the land will not 
work at all; not many such do now. In the cities, at 
best, the buildings will be owned by others than the 
owners of the land. The owners of the land will not 



48 FUNCTIONS OF GOVERNMENT. 

even have the trouble to look after and care for build- 
ings. Certain men will own the buildings, pay all the 
taxes on the land, do all the business that is done on 
the land, and pay the owners large sums of money for 
the privilege of doing business thereon. The amount 
that they will have to pay to the owners of the land 
will continually increase, for the population will con- 
tinually increase. Every child born increases the 
value of the land, because it drives people to the 
possession of less productive land, making the differ- 
ence between the value of the product of the poorest 
land in use and the best land in use greater. 

The amount that the men who do business then will 
have to pay to the owners of the land will be the whole 
profit of the business conducted, except a very small 
per cent, the smallest for which men will consent to 
work when there is no alternative but to work, beg, or 
starve. 

Present cities of two hundred thousand population 
will then contain at least five hundred thousand peo- 
ple. Every piece of business property so-called will 
be much more valuable then than now. 

For example, on the same piece of land much more 
money can be made in a year, then than now in the 
grocery business, because more groceries will be sold 
thereon then than now ; there will be more to buy ; but 



THE FIRST DUTY OP GOVERNMENT, ETC. 49 

the man who does the business then will realize a 
smaller per cent of profit on his capital than he does 
now. All surplus money made in the business will go 
to the owner of the land in the form of increased rent. 

The reader must now see that the present system 
is not only objectionable, but that its evils are intoler- 
able. 

The remedy is, of course^ in the adoption of the just 
system. Both systems secure the possession of the 
land in the individual. The prevailing system is re- 
sponsible for all of the evils indicated, because the 
government does not take to itself, in the form of taxes 
to be expended for the benefit of all, the advantages it 
confers upon some to the detriment of others. The 
just system, then, can be adopted simply by increasing 
the taxes upon the land values. With this land value 
there must not be confused any improvements made 
upon land, which, according to the present nomencla- 
ture of the law, are, together with the land, called real 
estate. Taxes upon them must not be increased; but, 
since they are the product of labor, the taxes upon 
them, together with the taxes upon all other forms of 
personal property, must be lessened as the taxes upon 
land values are increased. 

The function of government relative to land, herein 
advocated, is not new. What is said is certainly not 



50 FUNCTIONS OF GOVERNMENT. 

complete; but there is accessible to every reader a full, 
thorough and scientific treatise upon this subject in 
the form of "Progress and Poverty," by Henry George. 
I take the liberty of referring to this book without in- 
tending to commit anybody but myself to the idea that 
the foregoing sets forth, even in a feeble way, any of 
the ideas for which he contends, but certain it is that 
"Progress and Poverty," to a large extent, at least, 
must be held accountable for the ideas herein ad- 
vanced upon this subject. 

If enough has been said herein to induce any con- 
siderable number to study "Progress and Poverty" I 
shall not consider my efforts to have been in vain. 

My estimation of this work is such that today I 
would rather bear the reputation of having been its 
author than that of any other book published within 
the last one hundred years. I believe that in the main 
it sets forth the truth upon the most important subject 
to mankind at a critical and opportune time. 



CHAPTER VIII. 
LIBERTY. 

The administration of justice by government con- 
sists, in a large measure, at least, in the enforcement 
of contracts, in the exacting of damages in case of 
the breach thereof, and in the prevention of the com- 
mission of torts, which includes crimes, nuisances and 
all wrongs independent of contract, by inflicting pun- 
ishment therefor and by other means, or in the exact- 
ing of damages for the commission thereof. 

It being generally conceded that to admisister jus- 
tice is a proper function of government, we will as- 
sume it to be so. 

Barring, then, in what is to follow in this chapter, 
acts of government relative to the administration of 
justice, the government having secured the possession 
of land to individuals upon the equitable principles 
hereinbefore elucidated, no action upon the part of the 
government affecting the individual upon the land is 
justifiable, because not necessary to maintain the 
equality of the rights of individuals. 

Before society was formed, or outside the pale of 
society, the 'individual had the right to do anything he 



52 FUNCTIONS OF GOVERNMENT. 

would and could; his rights were limited only by his 
powers; the world within his reach was his, and this 
was so because of his opportunity, because in the ex- 
ercise of his powers he interfered with no one else. 

The government having secured to the individual 
in society the exclusive possession of certain lands, 
then, within his possessions, his rights are as unlim- 
ited as the rights of a man before society, or beyond 
its pale, because of his opportunities, because in the 
exercise of his powers within his possessions he inter- 
feres with no one. 

Here there should be no friction, no restraint; here 
there should be full opportunity for development, both 
physical and mental; here a person should be per- 
mitted to produce as much as he can, however wealthy 
he may become thereby; here men should be allowed 
to show the diiferences in their physical and mental 
powers. Remember, though men's powers differ, this 
is no cause of complaint as between man and man, and 
that the rights of each to the full product of his labor 
are equal. Here, whether land be used as a home or 
for business, the individual must be left free to do as 
he wills, limited only to the extent of being just in his 
relations with men — free to think, free to speak, free 
to act; here the flower of liberty must be allowed to 
bloom in its greatest fullness and beauty. . 



LIBERTY. 53 

Any act of government relative to tlie conduct of 
men in the use of their possessions, if effectual, would 
destroy the equality of the rights of men. Any aid 
that the government might give to any one would be 
to the detriment of all others. If practicable, which it 
is not, for the government to give equal aid to all, it 
would be futile. 

Whether the business be agricultural, mining, man- 
ufacturing, mercantile, commercial, professional, in- 
tellectual or whatsoever in its character, it should be 
imcontrolled, unregulated and uninterfered with by 
government, either directly or indirectly. 

Whether a hotel, bank, store, farm, or whatsoever, 
it is a mistaken idea that government should regulate 
or interfere in any degree in the operation of it. If it 
does interfere it acts as guardian to some ; it aids some 
to the detriment of others, and it destroys the natural 
equality of the rights of all. 

The law of the survival of the fittest should here 
have full sway; it is the mainspring of action. 

Why should a city government enact by ordinance, 
for instance, that whoever sells a ton of coal must have 
it weighed by a government official before delivery. It 
should not so enact. Such enactment would be de- 
signed to look out for the buyer when the buyer should 
protect himself. Under such a law the buyer would 



54 FUNCTIONS OF GOVERNMENT. 

lose an opportunity to exercise Ms own powers, and 
lie certainly would not develop under it; lie would be- 
come dependent instead of remaining independent. 

If buyers are left to protect themselves, they will 
do it most effectually. Any seller who should deliver 
scant measure or weight or an article inferior in qual- 
ity to that bought, many times, would soon be in ill re- 
pute, and for lack of patronage be driven out of busi- 
ness, while the worthy would thrive, and the evil com- 
mitted during the seller's period of activity could be 
remedied by the government in exercising its function 
of administering justice. 

Why should a city government, by ordinance, es- 
tablish a wood and hay market and provide therein as 
follows? "No person shall * * * keep standing 
for sale * * * at any other place than the said 
wood and hay market * * * any load of hay, wood 
or straw, but shall at once proceed with the same to 
such hay and wood market and procure such hay and 
wood, to be there measured or weighed before sell- 
ing or offering the same for sale to any one, and shall 
keep the same upon said market until the same shall* 
be sold or withdrawn from sale. And no person who 
shall bring in any loads with teams of hay, straw or 
wood * * * shall neither sell nor deliver the same 
until the same shall have been first taken to such wood 



LIBERTY. 55 

and hay market, and there been properly weighed or 
measured, as the case may be." It should not so en- 
act. It certainly cannot be considered as justifiable 
under the function of administering justice. 

Remember we are not now considering acts by gov- 
ernment regulating the conduct of individuals upon 
streets or public places, but only upon land the ex- 
clusive posession of which is given to individuals upon 
conditions. that render it just that they be given the 
possession. If it be conceivable that it would be a 
wrong, that is, a nuisance, for hay, wood or straw to 
be exhibited for sale upon certain pieces of land by 
reason of the surroundings, still it is not conceivable 
that in any city it would be a nuisance for them to be 
exhibited for sale ui3on any and every piece of land in 
the city except the one established as the market in the 
ordinance. Any such ordinance would be designed to 
give the possessor of the land upon which the market 
was established an advantage over the possessors of 
other lands in the ricinity; and if there were any con- 
siderable amount of hay, straw, or wood to be sold, 
the design of the ordinance would be most effectually 
accomplished. Such an ordinance would as certainly 
aid the possessor of this land, to the detriment of oth- 
ers, as would the direct payment to him by the city of 
money out of its funds. 



56 



FUNCTIONS OF GOVERNMENT. 



"An ordinance to establish a standard loaf of 
bread, to provide for its manufacture in a clean and 
wholesome manner, and to provide for its inspection;" 
or "An ordinance providing for the measurement of 
berries and small fruits;" or "An ordinance to create 
the office of inspector of meats, fish and' other provis- 
ions and define his duties," is each an evil. Is it pos- 
sible for an inspector to inspect all meats, fish, bread 
or berries to be sold in a city of any considerable size? 
Because a man is an official, is he any more competent 
than others to inspect? It is for the best interests of 
individuals to be self-reliant. If uninterfered with by 
legislation the worthy will survive, and the unworthy 
perish. Without an official inspector every purchaser 
will be an inspector, and the object sought to be ob- 
tained by means of the ordinance more certainly ac- 
complished. 

Do ordinances requiring auctioneers and others to 
obtain licenses for a consideration from cities before 
they can do business tend to maintain the equality of 
rights of individuals or to destroy them? There can 
be but one answer. Such ordinances thr,ow the bur- 
den of supporting the government upon individuals in 
proportion as they consume certain inoffensive things, 
and not upon the just and equitable principles that 
will be hereinafter considered. 



LIBERTY. 57 

Should tlie state not provide a bank examiner and 
pass no law regulating banking business, there would 
be no bank failures. Without law every depositor 
would be an examiner. No one could start a bank and 
succeed in securing many deposits without first having 
gained the confidence of the community by years of in- 
tegrity and success; and then only by professed will- 
ingness, maintained continuously, to disclose to all pat- 
rons the financial condition of the bank. 

With laws designed to protect people, they become 
dependent and derelict of duty and patronize any in- 
stitution that hangs out a sign. If the law is deficient 
or a single ofiicial is inefficient or dishonest, those who 
could and would have better protected themselves, but 
for whose benefit the law was designed, become suffer- 
ers by reason of government action, iD stead of gainers. 

We have a statute in the state of Minnesota en- 
titled "To Regulate and Protect Labor." If the law 
is constitutional, that is, if its provisions are germain 
to the subject expressed in the title, it is a statute of 
the worst sort, because in contravention of principles 
hereinbefore stated. If it be true that, though men's 
powers differ, each is entitled to the full product of 
his o^vn powers, then certainly any law that, in any 
degree, protects or regulates anybody in his conduct 
upon his own possessions, or the possessions of anoth- 



58 FUNCTIONS OF GOVERNMENT. 

er, is evil, bearing in mind as an exception the duty of 
government in the administration of justice. 

Government should, as we have herein assumed, 
administer justice, but should not do things itself sim 
ply to prevent a possibility of individuals doing wrong. 
The principle invoked in the laws such as hereinbefore 
suggested in the illustrations would, if carried out in 
all matters, constitute socialism, an evil second only to 
anarchy. 



CHAPTER IX. 
MONOPOLIES. 

In its original sense, a monopoly consisted of an ex- 
clusive right in a private individual, firm or company 
to sell a thing; but in time, by an extension of the 
term, it came to mean an exclusive right to do any- 
thing; and, by further extension, it has come to mean 
a right to do anything extended to only a part of the 
people of a community; that is, the right in any one 
or any limited number of individuals, firms or com- 
panies to conduct any business in which there is not 
unlimited natural competition, constitutes a monopoly. 

For illustratioa, when a government secures a per- 
son in the exclusive possession of land, that is, grants 
to one the right to possess a certain piece of land, to 
the exclusion of all others, it establishes a monopoly; 
and, again, should a government, by any law, either 
directly or indirectly limit natural competition in any 
business, it would thereby foster, if not establish, a 
monopoly. 

We have already seen that the monopoly of land is 
not only justifiable, but necessary, when established 
upon condition that the person to whom the monopoly 



60 FUNCTIONS OF GOVERNMENT. 

is granted enjoys no special advantages over others 
by reason thereof. We are now to investigate whether 
or not other monopolies are justifiable or necessary, 
and, if so, upon what terms they should be granted. 

Intimately connected with the subject of perma- 
nent possession of land, is that of public highways. It 
will be remembered that among the natural rights of 
man is the right to go where one pleases, as well as 
the right to stay where one pleases. The one right is 
of no less value than the other. Civilization would not 
result from permanent possession of land if opportuni- 
ties to travel, which highways afford, were wanting. 
Permanent possession of land existing without the 
right and opportunity of each to travel off of the land 
possessed, people would live in nearly as great isola- 
tion as though they were beyond the bounds of society. 
Without public ways for travel, the only condition 
upon which land can be justly permanently possessed, 
as shown in the preceding chapter, could not be en- 
forced. The tax collector could not reach the tax- 
payer. 

The right to travel, as well as all other natural 
rights, should be limited as little as possible in society, 
in order that opportunities to exercise mind and body 
may be as numerous as possible, in order to cause the 
greatest development possible. 



MONOPOLIES. 61 

In society these two rights, to-wit, the one to stay 
where one pleases and the other to travel where one 
pleases, are inconsistent. If permanent possession of 
land is established in society, the right to travel is 
limited to the extent that the right to the pos- 
session of land is established. No one can rightfully 
travel over a piece of land the exclusive right to the 
possession of which is given to another. 

The present system of allowing possession of some 
lands by certain individuals and of reserving other 
lands exclusively for public travel is the only practica- 
ble system, especially if the right is reserved in giving 
to some exclusive possession of land, to withdraw at 
any subsequent time the right to possession of the 
whole or any portion thereof for public travel upon 
compensation being made for the permanent improve- 
ments. 

This is all the compensation that should be made in 
the exercise of the right of eminent domain when the 
government enforces the only condition upon which 
the permanent possession of land can be justly estab- 
lished in individuals. When the right of eminent do- 
main is exercised, the present law of compensating the 
possessor of the land, not only for the improvements 
thereon, which must be lost upon the withdrawal, but 
for the value of the land besides, is a part of the un- 



62 FUNCTIONS OF GOVERNMENT. 

just system of allowing individuals to possess land 
without paying taxes to the extent of the value of the 
special advantages derived. The present rule of com- 
pensation, in case of the exercise of the right of em- 
inent domain, must go down with the downfall of the 
present system of land tenure; in place thereof the 
rule will prevail of compensation for improvements 
only. 

Certainly the same power which secures the pos- 
session of some land in society to individuals, must 
designate what land is to be reserved for public high- 
ways, and likewise for parks and other places for pub- 
lic resort, to an extent that the best interests of the 
people may demand. The right and duty of the gov- 
ernment to regulate the conduct of people upon high- 
ways and public places, that the strong may not over- 
power the weak and destroy the equality of rights of 
men, so naturally follows that we shall consume no 
space in considering it, but assume the duty of such 
regulation to exist. 

Highways are the lands of all, that is, of the gov- 
ernment, reserved from settlement as places of travel 
for all. They should be put to no other use than that 
of travel. However, any other use of the highway 
that in no degree affects the travel thereon would be 
unobjectionable; but in no event should the govern- 



MONOPOLIES. 63 

ment, under its right to regulate travel upon the high- 
ways, license the conduct of any business thereon that 
in any degree might interfere with travel, but, at the 
most, only such as may facilitate travel. The common 
custom in cities to demand and receive compensation 
for licensing individuals to do business, other than 
travel upon the highways, is wrong in principle. If the 
business does not in any degree interfere with travel, 
it should be permitted without interference and with- 
out compensation; but if it does in any degree inter- 
fere with travel it should not be permitted or licensed, 
even for a compensation, but prohibited altogether. 

The common custom in cities of demanding a li- 
cense fee as a condition precedent to the conducting of 
an inoffensive business upon the highways that in no 
degree interferes with travel is an offspring of 
the existing unjust system of land tenure. The 
custom has arisen in compliance with the demands 
of landlords to lessen competition with those doing 
business upon their lands, that the landlords may, by 
reason thereof, demand larger rents for their holdings. 

In regulating travel upon the highways no limita- 
tions or restrictions should be placed upon any one as 
long as the manner and extent of the user does not in- 
terefere with the full exercise of the same right to 
travel by all others. As long as the extent and man- 



64 ■* FUNCTIONS OF GOVERNMENT. 

ner of the user by any one does not interfere with oth- 
ers, it is immaterial to the government whether the 
person is engaged as a common carrier or not; but 
when the user, by reason of the extent or manner 
thereof does interfere with the equal rights of 
others, then to the extent of the interference it should 
be stopped; or, if permitted, then only upon such con- 
ditions that those allowed to exercise the special privi- 
lege receive no special advantage over others, whether 
the person permitted to use the highway to a degree 
of interference with others be engaged as a common 
carrier or not. 

One of the common means of conveyance today in 
cities is by street railways; this certainly is a manner 
of use that does interfere with the equal rights of oth- 
ers upon highways. Street railways are a means of 
great convenience and economy to the public, and 
should be permitted, but by whom should they be 
owned and operated, by the government or by indi- 
viduals; if by individuals upon what conditions? 

Of late years much has been said by way of argu- 
ment that private enterprise should not be permitted 
to own and operate street railways, but that this should 
be done by the government. 

Certainly private enterprise should not be permit- 
ted so to do if those engaged therein gain any advan- 



MONOPOLIES. 65 

tage thereby over others of equal rights, which cannot 
be reclaimed for the benefit of all others; or if private 
enterprise is less capable of rendering the service ef- 
ficient than the government would be. But upon prin- 
ciples hereinbefore elucidated, to individuals should be 
left the undertaking, and the government should not 
act unless individuals could not render efficient service; 
or if individuals could render efficient service but the 
government could not permit it upon equitable prin- 
ciples. 

Private ownership and management is the present 
rule, and it is such an universally acknowledged fact 
that private owners are capable of furnishing efficient 
service that we are safe in saying that government 
should not own or operate street railways unless for 
the second reason above specified. 

In granting without condition to individuals the 
right to conduct and operate street railways, which 
do certainly interfere with the travel of others, special 
advantages to the grantees over others are thereby 
conferred. 

It will be remembered that in granting to some the 
right to the possession of the best land, that the govern- 
ment created special advantages to some over others, 
but it was justified because a means was discovered 
whereby the especial advantage could be reclaimed by 



66 FUNCTIONS OF GOVERNMENT. 

the government for the benefit of all, and thus equity 
re-established. 

To determine whether or not government should 
grant to individuals the right to construct and operate 
street railways, we have only to determine whether or 
not the right can be granted upon such conditions that 
those exercising it receive no special advantages; or, 
if they do receive special advantages, whether or not 
the value of the special advantages conferred can be 
measured and taken by the government as a condition 
of the grant; if so, then the matter should be left to 
private enterprise, for in this way there is greater en- 
joyment of natural rights and greater personal free- 
dom with the natural equality of rights of men still 
maintained. 

Of course the matter of primary importance and of 
controlling consideration in each case is the preserva- 
tion of the natural equality of men's rights; and of 
secondary importance is it that as much personal free- 
dom be permitted as possible, consistent with such 
equality of rights. 

In considering the subject of land had not a prac- 
tical way been discovered by which individuals could 
be granted the right to the possession of land 
and the advantages accruing to them be reclaimed 
by the government, then certainly in obedience to the 



MONOPOLIES. 67 

principle that the rights of each are equal, the govern- 
ment would have been obliged to operate land, and 
the contention of the socialists to that extent would 
have triumphed. So here, if the right to own and op- 
erate street railwaj^s cannot be granted to individuals 
without distroying the natural equality of rights of 
man, then the government must own and operate 
them; and the benefits to be derived from personal 
freedom must be sacrificed to that extent. 

In considering the land question we divided land 
up into separate pieces or tracts and gave to each the 
exclusive possession of different pieces. As populous 
as is the earth today, there is plenty of land for all, 
and, without question, there will be plenty of land 
for all for a very long time in the future, if just condi- 
tions of holding the same are imposed so that it will 
be impossible for one to hold more than can be advan- 
tageously used. 

Each person having possession of a separate piece 
of land secured to him has a monopoly of the same. 
There is land enough to grant a monopoly to each and 
all. The advantage accruing to each monopolist of 
land is the rental value of the land possessed by him, 
which is determined by comparing the value of the 
product thereof with the value of the product of the 
best land in use that can be had for nothing; and that 



68 



FUNCTIONS OF GOVERNMENT. 



was tlie amount specified that each should pay to the 
government as a condition of his holding the land that 
the rights of each might remain equal. 

It cannot be determined by analogous reasoning 
what amount the grantee of a street railway fran- 
chise should pay to the government if franchises are to 
be granted to individuals ; for while in the case of land 
each person has or may have a franchise or monopoly 
of a piece or tract and the special advantage thereof 
is ascertained by a comparison as above indicated, in 
the case of a street railway, but one, or, at most, but a 
limited number, can receive a franchise, and there can- 
not be a similar comparison. If there were room on 
streets for innumerable street railways, some being 
better situated than others, then the case would be 
analogous to that of land, and the money to be paid 
the government for a. franchise could be easily deter- 
mined; it would be the surplus value of the earnings 
under it, operated by an ordinary man, over the value 
of the earnings of the best franchise in use that could 
be had for nothing. 

The condition then upon which a street railway 
franchise or monopoly can be justly granted to indi- 
viduals, if at all, must be determined in some other 
way. 

Some have contended that cities should let or rent, 
from time to time, the privilege of constructing, own- 



MONOPOLWS, 69 

ing and operating street railways to the highest bid- 
der, or to the one who w^ould offer the most valuable 
terms or conditions for the privilege; but whether the 
government should let the whole - privilege of con- 
structing, owning and operating the street railway, or 
whether the government should construct and own 
the plant, and let only the privilege of operating it, 
both of which plans have been suggested, in either 
case it could not grant the franchise unconditionally 
to any one, even for brief periods. 

The highest bidder, if no conditions were imposed, 
after paying what he had bidden for the privilege, 
might not construct a railway at all, or not operate it 
at all after he constructed it; or, if he constructed it 
and undertook to operate it, might not. furnish efficient 
service; or if he did all that, might charge for it such 
unreasonable rates that the public could not avail 
themselves of the service; or he might so discriminate 
in rates as to ruin any firm in any locality to the bene- 
fit of another, and thereby destroy competition and 
virtually establish monopolies in different kinds of 
business in any locality, but such a scheme is not as 
feasible of execution by street railway companies as 
by other railway companies. 

Remember, it was stated that street railways are a 
means, of conveyance of great convenience and econ- 



70 FUNCTIONS OF GOVBRNMENT. 

omj, and are, therefore, greatly to be desired; so that 
if the franchise is to be granted to individuals at all 
it must be upon terms and conditions that will insure 
the accomplishment of the purpose for which granted, 
that is, be efficient in service and reasonable in charges 
for the enjoyment thereof. 

It may be said that whoever should bid the most 
for the privilege could not afford to operate a street 
railway except in a reasonable way, charging reason- 
able rates to all, for thereby would he realize the great 
est profit; but the consideration that the method of 
operation might establish monopolies in other kinds of 
business in which the owner of the street railway 
might be interested, whereby larger profits might be 
realized than in the street railway business, ought to 
be a sufficient answer to the statement, and show that 
the franchise might be obtained for the indirect pur- 
pose of affecting other lines of business. 

It is now pertinent to inquire what is a reasonable 
charge? 

Were the government to construct and own street 
railways, paying therefor out of the public funds, and 
then operate them, it could not pay the operating ex- 
penses out of the public fund and charge nothing for 
the transportation of people, because the public funds 
belong equally to all, while all people do not ride on 



MONOPOLIES. 71 

street railways, and no two ride to the same extent 
exactly. 

The public fund, belonging equally to all, should be 
expended only for the equal benefit of all. Should any 
portion of the public fund be loaned to anyone the bor- 
rower thereof should pay the ordinary rate of interest 
as surely as though the money were borrowed of a pri- 
vate individual. Should the government construct 
street railways with the public fund, and then also 
operate the same, because some of the taxpayers would 
not use the street railway at all and no two would use 
it to the same extent, people could not ride for noth- 
ing; but the rates of charges to preserve the equality 
of rights of men would have to be sufficient to defray 
the operating expenses and to create a fund sufficient 
to constitute ordinary interest or profits to go into the 
public fund to compensate for the use of that portion 
of the public fund utilized in constructing the plant, 
and thereby withdrawn from the use of all for the use 
of only a portion of the taxpayers. 

Should the government own and operate street rail- 
ways and charge for the service to the extent above 
indicated, the equality of the rights of men would not 
thereby be destroyed; that is, no one would gain any 
advantage over others; but it must be remembered 
that in view of considerations hereinbefore advanced 



72 



FUNCTIONS OF GOVERNMENT. 



the best interests of the people demand that the gov- 
ernment should not act in any case except in cases 
where if individuals were to act they would gain ad- 
vantages over others. We are now endeavoring to as- 
certain the conditions to accompany a franchise to an 
individual that will avoid giving the grantee of the 
franchise any advantage over others in operating un- 
der it. 

We have now found what would be a "reasonable 
charge" so far as the patrons are concerned, should 
the government own and operate street railways. Cer- 
tainly any charge, not exceeding what would be a rea- 
sonable charge, if the government operated street rail- 
ways, would be a reasonable charge, so far as the pub- 
lic is concerned, whoever operated it. But regardless 
of what charges, if any, a government should impose 
for service, should a government operate street rail- 
ways, certain it is that should a street railway fran- 
chise be granted to an individual and should he con- 
struct and operate it in an efficient manner, and estab- 
lish such rates of charges for the service that he would 
realize therefrom only his operating expenses and an 
ordinary rate of profit upon his investment, then, so 
far as the public is concerned, they would enjoy the 
advantage of a system, and the individuals operating 
the same would enjoy no special advantage over 



MONOPOLIES. 73 

others, because others in business not monopolistic in 
character are at liberty to make equally as much. The 
expression "ordinary rate of profit" is not indefinite, 
for in all regular lines of business conducted by prl- 
yate enterprise upon private possessions, where no 
special privileges are necessary frorn the government 
to enable them to conduct the business, regular 
rates of profit are realized, governed by many circum- 
stances, among which are the hazards of the business. 

But if only an ordinary rate of profit could be real- 
ized by the grantees of the franchise, no one would 
pay anything for the franchise; it could not be let or 
rented to the highest bidder, for no one would bid any- 
thing for the privilege of conducting a business in 
which only an ordinary rate of profit could be realized; 
that is, only such a rate of profit as could be realized 
in conducting any common business upon private pos- 
sessions. There is no merit then in the contention 
that the franchise should be let to the highest bidder. 

It is well to consider further in this connection that 
the "investment" upon which an ordinary rate of profit 
should be permitted, does not necessarily include the 
whole cost up to date. To illustrate: Should a per- 
son or company receive a street railway franchise, con- 
struct its road in a certain way, build its cars in a cer- 
tain way, operate the plant by a certain power and in 



74 FUNCTIONS OF GOVERNMENT, 

a certain way, and thereby incur an expense, and 
before the plant should be entirely consumed by 
wear there should be a discovery by means of which 
the plant could be constructed or operated much 
cheaper than it actually cost, or some discovery made 
whereby roads or cars differently built or operated by 
another power would be much more efficient, then the 
basis upon which to calculate the ordinary profit 
would be the cost under the cheaper method; or if a 
more efficient system should be discovered, it would 
have to be adopted, and its cost alone used as the 
basis or considered as the investment upon which to 
calculate the ordinary rate of profit. 

Kecently a manufacturing plant was constructed 
consisting of buildings and machinery; the ma- 
chinery was of the most improved pattern at the time 
of the construction of the plant, and the building was 
adapted to the operation of the machinery; but very 
soon after the plant was constructed, and while the 
building and machinery were still new and capable 
of much use, inventions were made whereby the arti- 
cle to be manufactured by the plant in question could 
be produced much cheaper by different machinery re- 
quiring different buildings. As a result, the owner of 
the plant above specified could not utilize it in manu- 
facturing the article, because others with the new ma- 



MONOPOLIES. 75 

cliinery invented could manufacture much cheaper and 
undersell him in the market. The cost of the plant 
was therefore a complete loss to its owner. 

This being a hazard in conducting a business which 
is not a monopoly, that is, in which there is competi- 
tion, it must be a hazard, in justice to the public, the 
members of which are interested parties, in a business 
which is a monopoly, that is, in which there is no com- 
petition, or, at least, limited competition. 

The basis, then, which must control the charges for 
the service is the reasonable cost, at date, of the plant, 
which must at all times be kept efficient. 

That any efficient board of commissioners in each 
city where a street railway franchise is granted could 
approximately determine the reasonable cost of the 
plant at all times, and determine what an ordinary 
rate of profit would be and regulate the charges for 
the service so that the grantee of the franchise would 
realize only his reasonable operating expenses and an 
ordinary rate of profit upon his investment, considered 
as above specified, there can be no doubt; therefore, it 
follows that the operation of street railways should be 
left to private enterprise upon the conditions above 
specified. This is certainly so, unless it would be im- 
practicable for a board of commissioners to perform 
their duty above outlined; but, as to this, it is certain 



76 FUNCTIONS OF GOVERNMENT. 

that if proficient men could not be chosen to de^termine 
the investment and an ordinary rate of profit, profic- 
ient men could not be furnished by the government to 
construct and operate street railways. 

It probably has already occurred to the reader that 
whatever individual or private company operates un- 
der a franchise subject to the conditions already spec- 
ified is at a disadvantage rather than at an advantage, 
as compared with people doing business upon private 
possessions, needing no franchise to conduct their busi- 
ness; but it being a self-imposed disadvantage, it is 
not a cause for complaint. 

The disadvantage is this: Whoever conducts a 
business upon private possessions, the cost of the priv- 
ilege for doing which is only the land value tax, based 
upon the earnings of an "ordinary" man, is free, it will 
be remembered, to make more than an ordinary profit 
by extra ability, extra industry, or by extra economy; 
but whoever operates under ^ a franchise, subject to 
conditions as hereinbefore specified, whatever his abil- 
ity, whatever his industry, or whatever his economy, 
cannot realize more than an ordinary rate of profit, 
cannot make more than an ordinary man would make 
either in operating under a franchise or in conducting 
any other business. 



MONOPOLIES. 77 

However, this comparative disadvantage under 
which the operator under the franchise would labor 
might be compensated for, to a degree approximately 
proper, by graduating the charges in proportion to the 
efficiency of the service in connection with the econ- 
omy thereof; that is to say, should the operator under 
a franchise subject to such conditions render excellent 
service at an exceedingly small expense the commis- 
sioners might allow him to charge rates that would net 
him a little higher rate of profit than the same rate 
would net another not so proficient in the business; 
also that justice in the matter might be approximated, 
like commissioners of different cities might compare 
the records of those operating in different cities where- 
by the capacity of an ordinary man in the matter 
might be approximately ascertained, and if so, his 
capacity used as a standard in the regulation of 
charges, in which case operators would be at less or 
no disadvantage, as at first stated. 

But should it be said that individuals will not ac- 
cept franchises from the government if the conditions 
are that only an ordinary profit can be realized in op- 
erating under them, the answer is that experience 
teaches us the contrary. 

The law has developed in this country, that it is 
just and proper to regulate a business operated under 



78 FUNCTIONS OF GOVERNMENT, 

a franchise, and the tendency is actually toward great- 
er supervision and regulation by government of indus- 
tries of this character; yet such franchises are sought 
after with as great eagerness as ever. 

But, in any event, a franchise must never be grant- 
ed without said conditions reserved and exercised by 
government, otherwise the natural equality of rights 
of men would be destroyed; and whenever it becomes 
desirable to have any such enterprise conducted, if 
there be no private individuals or company willing to 
accept the franchise necessary to operate it, upon the 
conditions found above to be necessary to maintain 
the equality of the rights of men possibly then, but 
certainly not till then, should the government con- 
struct and operate them. 

But, should the time ever arrive when an individ- 
ual is wanting to accept a franchise upon such terms 
and conditions, even then the government should not 
both construct and operate a street railway if the per- 
formance by it of a lesser part will accomplish the de- 
sired end without destroying the equality of the rights 
of men. In obedience to our general principle, herein- 
before stated, if possible, the operation of the plant, 
when constructed, should be left to individuals in their 
private capacities. 



MONOPOLIES. 79 

A plan of construction and ownership of a street 
railway plant bv the government, with the operation 
thereof by individuals, not only seems possible, but 
wholly practicable. Suppose a city government to 
construct a street railway and equip it ready for oper- 
ation, and then to let the operation of the same to who- 
ever, in open competition for the privilege, would 
agree to furnish a certain service for the lowest rates 
of charges; that is, suppose some in bidding offer to 
operate and to charge only five cents, others four 
cents, others three cents, others two cents, and others 
one cent for the same service, and the government let 
the operation of the same to the one who offers to 
operate upon a one cent charge, then the rights of 
each would be equal, and if the right to operate was 
let for only a short period of time, say one year, when 
the privilege to operate should again be let to the low- 
est bidder, then only ordinary rates of profit would be 
realized by an ordinary person in operating, because 
if any lessee of the privilege in any year should realize 
more than an ordinary rate of profit upon the charge 
that he maintained, then at the next chance to bid 
others would bid under, that is, offer to operate and 
charge lower rates, and rates, too, so small that with 
them ordinary men could realize only an ordinary rate 
of profit in operating. 



80 FUNCTIONS OF GOVERNMENT. 

Though this system is not as desirable as the one 
first suggested, because it deprives individuals of the 
opportunity of the construction of the plant, and for 
that reason should not be adopted until, if ever, indi- 
viduals will not accept a franchise upon the condi- 
tions embodied in the first system, still, this system 
is much preferable to operation, as well as construc- 
tion, by the government, and it may be said in its 
favor that under it full play is given to the faculties 
of men. 

To summarize what has been said so far, it may 
be stated that the government should not operate 
street railways, but, instead, grant a franchise therefor 
to individuals; but only upon the condition that the 
operation by individuals should be regulated by gov- 
ernment, so that the company operating under the 
franchise should at all times furnish reasonably effi- 
cient service to the public, at rates of charges that 
would only net the company operating it, considered 
as composed of ordinary men, its operating expenses 
and an ordinary rate of profit on what would be the 
reasonable cost of reproduction of the plant; that the 
government should operate street railways when in- 
dividuals will not accept a franchise therefor, or oper- 
ate the plant under either plan above outlined; but 
the government should not operate street railways 



MONOPOLIES. SI 

until then; that the reasons for said conclusions are, 
that thereby the greatest freedom of individuals is 
attained, and no one thereby gains any advantages 
over others, but, instead, the rights of individuals re- 
main equal. 

Attention should be called to the fact that there 
are three general features that characterize the sub- 
ject of street railways and control the conclusions in 
the matter: 

First: In the operation of street railways the 
rights of others of equal rights are interfered with. 

Second: In the operation of street railways there 
is either none or limited competition. 

Third: Street railways are operated for the bene- 
fit of the public. 

Certainly the same considerations hereinbefore ad- 
Tanced relative to street railways, arise in regard to 
all other kinds of business that possess the same three 
general characteristics, and the same conclusions 
relative to them are inevitable; that is to say, that in 
the case of any business in the operation of which by 
individuals the operators would gain an advantage 
over others of equal rights, and in the operation of 
which there would be none or limited competition, and 
which business would be operated for the benefit of the 
public, individuals should operate it subject to the can- 



82 FUNCTIONS OF GOVERNMENT. 

dition that the government should regulate it at all 
times, so that reasonably efficient service would be fur- 
nished to the public at charges that would net the 
company only its operating expenses and an ordinary 
rate of profit upon the reasonable cost of reproduction 
of the plant; but that if individuals will not accept a 
franchise and operate such business upon such terms, 
then the government should own the plant and let the 
privilege of operating of same, and thereafter if nec- 
essary, but not till then, should the government con- 
struct, own and operate the same. 

Now, what kinds of business are there that possess 
these three general characteristics? First, do not rail- 
ways other than street railways possess them? One 
might construct, own, and operate a railway upon his 
own land that would cross no highways, and operate 
the same for his sole benefit, in transporting himself 
or his own property from one part of his land to an- 
other. In such a case, the government should not in- 
terfere with or regulate the operation of it any more 
than it should interfere with or regulate the conduct 
of farming or any other business that any one may 
prosecute upon his own land for his own benefit solely. 
But such a case is unusual, if not wholly suppositional. 

Under present conditions, no considerable railway 
could be constructed and operated without running 



MONOPOLIES. 83 

lengthwise of or crossing many highways; and, if so, 
the operation of a railway would interfere with 
the equal rights of others, and the first gen- 
eral characteristic is present in this case. Be- 
sides, as the country is at present settled 
throughout the United States, the land for any 
considerable railway could not be obtained without 
the exercise of the power of eminent domain by the 
government, from which fact it follows, that those for 
whom this privilege might be exercised by the govern- 
ment, would thereby receive advantages to the disad- 
vantage of others; and this being so, inasmuch as the 
government could not exercise this power for all, but 
only for a limited number there cannot be unlimited 
competition in the business, and the second character- 
istic is present Besides, the power of eminent do- 
main cannot be exercised except only for the public 
good, and any company operating a railw^ay under it is 
of necessity a common carrier, that is, it must work 
for any one who may desire it. Therefore, in the case 
of railways the three characteristics exist, and there- 
fore what is true of street railways is true of other 
railways, and individuals should operate them if they 
will upon like terms and conditions. 

There is a difference between street railways and 
other railways in this, that in the case of other rail- 



84 FUNCTIONS OF GOVERNMENT. 

ways they usually occupy much land other than that 
of streets, and therefore in the case of such, at first, 
and in any event, regardless of profits and all other 
considerations, there must be a tax levied upon the 
value of its lands, upon the same principles that all 
land values are taxed. The principle of land taxation 
is blind as to the uses to which the land may actually 
be put, but of course this land tax would have to be 
regarded as one of the operating expenses in regu- 
lating the charges of the railways; that is to say, after 
the payment of a tax upon the value of the land used 
as a roadbed for the railway, the rates of charges for 
transportation would have to be sufficient to allow the 
payment of the land tax as well" as the payment of oper- 
ating expenses. 

Again, telegraph companies possess the same gen- 
eral characteristics; their poles and wires are neces- 
sarily upon streets, and to the extent of all lands other 
than streets to be used by them the power of eminent 
domain must be exercised for them ; and therefore they 
interfere with the equal rights of others, and competi- 
tion in that business is limited and they are operated 
for the public. So of telephone companies, electric 
light and power companies, and every company that 
must stretch wires along or across highways, or have 
the power of eminent domain exercised in their favor; 



MONOPOLIES. 85 

SO of gas companies that must extend tubular pipes in- 
stead of wires in similar places; so of water companies 
and of sewerage companies. There may be others 
not enumerated, and unless all progress stops, there 
will be new ones in the future of a similar character. 
It is essential that the principle should be understood 
that it may be applied in all cases that now exist and 
as they may arise. 

To summarize again, the government should always 
regulate in the respects specified the operation of 
monopolies by individuals. The kinds of business 
in which there should be no regulation by government 
is considered in the proceeding chapter. The consider- 
ation here is, when government should regulate, not 
when it should not. 

It may not be without profit to call attention 
to the fact that all of the monopolies specified in 
this chapter are really land monopolies, because 
they all arise on account of the exclusive use of 
certain' lands, even though it may be only of space suffi- 
cient to sustain a wire or on account of a superior use 
of certain lands as is the case when highways are util- 
ized. 

T^Tienever an exclusive or superior use of any land, 
however small in quantity, is granted, a monopoly is 
created, competition is excluded or restricted, and 



86 FUNCTIONS OF GOVERNMENT. 

without regulation undue advantages thereby arise, 
therefore, to maintain the rights of men equal, a func- 
tion of government arises to either appropriate such 
advantage to itself or to so regulate the conduct of the 
business that no undue advantages may arise. 



CHAPTEE X. 
MONEY— ITS EVOLUTION. 

What functions, if any, has the government to per- 
form in regard to money? Before an answer can be 
given, a correct understanding of money is necessary. 
Let us then first proceed to ascertain what money is 
and what functions it performs. 

To be free to investigate the subject, let us suppose 
the term money had never been used, nor any other 
term to denominate what we now call money. Let us 
suppose, also, that no government has ever passed any 
law regarding it. 

Wealth includes all objects of value, that is, all ob 
jects of man's desires which can be obtained only by 
man's efforts. A man might possess wealth, then, 
outside of society, where he could use and consume 
it, or store it as long as the article constituting his 
wealth could be preserved without decay. Outside of 
society, however, he could borrow of no one, lend to no 
one, contract no debts, nor trade with any one. In so- 
ciety, also, he might possess wealth, and the wealth 
of one man might consist of articles of one kind, and 
the wealth of others, of articles of different kinds. The 



88 FUNCTIONS OF GOVERNMENT. 

wealth of some might consist of articles which would 
decay quickly, and cease to be wealth, while that of 
others might consist of articles which would retain 
their values for a long period of time. 

In society, as out of it, each might use and consume, 
or store his wealth until it would decay, but in society 
people might do with their wealth what a person could 
not do with it outside of society. In society people 
could borrow of and lend to each other their articles of 
wealth, to be used and returned; or they might trade 
with each other. For illustration, one man might give 
to another some hay in exchange for some fruit, or he 
might sell to another his fruit upon agreement that the 
purchaser some time in the future would pay therefor, 
by giving to him an equal amount of fruit of equal 
quality. They might also contract debts with each 
other. 

Any person might lend or borrow any kind of 
property, trade one kind for another; or he might sell 
any kind of property to another, to be paid for at the 
time or at any time in the future, in any kind of prop- 
erty as they might agree. A person, however, could 
not without loss lend any kind of property to be used 
and returned, except such as was durable and could be 
returned without appreciable decrease of value. In 
trading, however, one might exchange with profit a 




MONEY— ITS EVOLUTION. 89 

durable article for a perishable one; for he might de- 
sire the consumption at once of the perishable one, and 
not desire the use of the other at the time. In making 
a sale a person could not, in justice to himself, agree 
to accept in the future as pay therefor, any article but 
one which he at the time believed would be as valuable 
when the time of payment came as the article sold was 
at the time of the sale. 

Some classes of things may be very valuable some- 
times, and of little value at others. This is so because 
man's desire for them may be more or less at one time 
than at another, and because it might require a greater 
or less effort of man to obtain them at some times than 
at other times. 

From the definition of value, it follows that the 
value of an object depends upon two independent 
things: One is, the desire of man for it; the more the 
individual desires it, and the larger the number of in- 
dividuals that desire it, the greater will be its value. 
In other words, as usually expressed, the greater the 
demand the greater the value ; the less the demand, the 
less the value. The other is the amount of labor re- 
quired to produce it; the greater the labor the less can 
any individual produce, and the less the number of in- 
dividuals who will produce any of the thing, and the 
greater the value of that which is produced. As usually 



90 FUNCTIONS OF GOVERNMENT, 

expressed, the less the supply the greater the value; 
and the greater the supply the less the value. 

The value of anything depends upon the supply and 
demand of it. A change in either will certainly affect 
the value. A change in both may or may not; a less 
demand would tend to lessen the value, but a decrease 
of supply would tend to increase the value; and if the 
opposite tendencies were of equal potency, and if they 
both operated at the same time, the value would re- 
main stationary, but not otherwise in case of any 
change in either supply or demand. 

In theory, the value of anything may remain sta- 
tionary indefinitely, but in practice it is improbable, 
because it is improbable that neither the supply nor 
demand will ever change, or if either should change, 
that the other at the same time will so change as to 
offset exactly the effect of the change of the other. Any- 
thing, of course, includes everything, and in all proba- 
bility nothing will remain exactly stationary in value 
for any considerable length of time, but some things 
will remain much more nearly stationary in value than 
others, because, from the nature of things, the sup- 
ply and demand of them will be more regular. 

It should be impressed upon us that the value of 
every single substance upon earth is independent of 
the value of every other substance. The same law of 



MONEY^ITS EVOLUTION, 91 

supply and demand, and nothing else, fixes at all times 
the values of everything. True it is, that where two or 
more different substances are used by man for the 
same purpose, that the supply and demand, or either, 
of one may affect the demand or supply, or both, of the 
other. But still, it is true, that it is the supply and 
demand of each that fixes its value. 

As it is improbable that the value of anything will 
remain exactly stationary through any considerable 
period of time, so it is improbable that the values of 
different things will change exactly alike at the same 
time; but, rather, it is probable that the values of dif- 
ferent things will rise at different times, or differently 
at the same time; or fall at different times or differ- 
ently at the same time; or that the values of some 
things will rise while those of others will fall. 

The theoretical value of an article not changing 
during a period of time might be represented by the 
straight horizontal line, 
A B 

The value of an article gradually and regularly ris- 
ing during the same period might be represented by a 
straight line gradually and regularly ascending, as, 
CD. 

D 



92 



FUNCTIONS OF GOVERNMENT. 



The value of an article gradually and regularly ris- 
ing during the same period, but rising only one-half as 
much as the one last referred to, might be represented 
by a straight line gradually and regularly ascending, 
as EF. 



The value of an article gradually and regularly fall- 
ing during the period might be represented by a 
straight line gradually and regularly descending, as 
GH. 




The value of an article gradually and regularly fall- 
ing in value during the same period, but falling in 
value only one-half as much as the article last above 
referred to, might be represented by a straight line 
gradually and regularly descending, as IJ. 



The value of an article rising part of the time and 
falling part of the time during the same period, might 
be represented by the zigzag line, as KL. 



MONEY-ITS EVOLUTION. 93 

The value of an article sometimes rising and some- 
times falling during the same period, but at all the 
times of greater value than at the beginning of the 
period, might be represented by the line MN. 



]y; -rrrrrZZ N 

The value of an article rising and falling during the 
period, but at all times of less value than at the begin- 
ning of the period, might be represented by the line 
OP. 

o^ - 



^^^ p 

In any society, after a time, it would be learned that 
there would be some articles the values of which would 
remain more nearly stationary than that of other arti- 
cles. Any one in dealing in such articles, then, would 
be less apt to realize any advantage or disadvantage 
thereby than in dealing in other articles; and for that 
reason, people would be more apt to agree to accept 
such articles in payment or to make payments in them 
in the future, than in any other articles. If this is true 
the demand for these articles must increase, and they 
could be more easily disposed of than other articles. 

With such an article in existence, if a person desired 
to dispose of his surplus fruit, for hay, of which he had 



94 FUNCTIONS OF GOVERNMENT. 

not enough, and lie could not quickly find a man who 
had hay which he wished to trade for fruit, he would be 
apt to exchange the fruit for this article of most nearly 
stationary value, for which there was a general de- 
mand, although he might not desire it, however, at the 
time, except for the purpose of procuring hay with it. 
Having procured hay with it in this transaction, this 
article of most nearly stationary value would be the 
means of effecting an exchange of things of value, or, 
in other words, an instrument of exchange. 

If a person wished to store his wealth, other 
things being equal, he would exchange a portion of it 
at least for this kind of wealth. Suppose a person 
wished to lay aside his wealth for future use, and it 
consisted of perishable articles of changeable value, 
then he would certainly trade them for durable arti- 
cles, to be stored; and of the durable articles, he would 
exchange a portion at least for those which he believed 
would not decrease in value, but upon the contrary 
which he believed would increase in value while stored, 
or, what in effect is the same thing, for durable articles 
which would net him an income while stored, or for 
articles that could be let for use for a consideration. 
He would exchange his wealth for buildings, or inter- 
est-bearing securities, or for something from which he 
might realize an income while not using it himself, 



MONEY— ITS EVOLUTION. 95 

But such things cannot always easily be disposed of at 
their true value; and consequently one would not be 
apt to convert into such properties all of the wealth 
which he wished to store, but a portion thereof into 
some article, durable, certainly, for which there was a 
general demand, and which could be disposed of 
quickly at its true value — one which would not de- 
crease, if not increase, in value while stored. Such an 
article would this of most nearly stationary value be; 
therefore a person in society desiring to store wealth, 
would store a portion of it at least in the form of this 
article of most nearly stationary value. 

If he sold or bought an article on time, he would 
contract payment in this article. Why? Ea^h 
party to a sale on time, governed by selfishness, 
would like so to contract as to gain an advantage over 
the other. But if the parties to the contract were of 
equal intelligence and good judgment, neither would 
succeed; and to effect a sale at all on time, payment 
would have to be provided for in this article of most 
nearly stationary value; for one of the parties to every 
time contract is the loser, and the other the gainer; 
one suffers an undue disadvantage, and the other gains 
an undue advantage if the value of the article in which 
payment is to be made changes between the time of the 
making of the contract and the time of the payment. 



96 FUNCTIONS OF GOVERNMENT. 

To illustrate, suppose an article of a certain value to be 
sold today, to be paid for in something one year from 
today, in justice to both parties, what should be the 
value of the article of payment at the time of the pay- 
ment? Barring the subject of interest, which is never 
paid as part of the purchase money, but rather as com- 
pensation for the use of the article bought between the 
time of the purchase thereof and the time of payment 
therefor, the article given in payment should be of the 
same value when paid that the article sold was of value 
when sold. If it were of greater value the seller would 
unduly gain thereby, and if it were of less value the 
purchaser would unduly gain. We are, therefore, justi- 
fied in stating "if he sold or bought an article on time, 
he would contract payment in this article of most 
nearly stationary value," because we are assuming two 
parties to a contract, of equal intelligence and good 
judgment 

Concurrently with the gradual adoption of said ar- 
ticle to the three uses already mentioned, it would be- 
come established as a standard of value; that is, those 
desiring to determine whether or not any other article 
had increased or decreased in value during a certain 
time, w^ould compare its value during the period with 
the value of this article of most nearly stationary value 
during the same period ; and when this custom became 



MONEY— ITS EVOLUTION. 97 

established, then to say that any article had increased 
or decreased in value would simply mean that it had 
increased or decreased as compared with this one arti- 
cle of most nearly stationary value. Of course, at any 
time, the value of anything may be compared with the 
value of anything else, and the value expressed in 
terms of the article with which compared. For illus- 
tration, the value of a horse may be compared with the 
value of a cow, and the value of the horse expressed 
in terms of cows, or of cows in terms of horses. But a 
general standard of value becomes established only by 
a custom of comparison of values, which involves a 
lapse of time; and certainly no general custom of com- 
parison of the values of articles generally with the 
value of one thing would arise, unless that one thing 
were of more stationary value than the values of other 
things; and the same custom would establish the habit 
of expressing the value of all other articles in terms 
of this article of most nearly stationary value, that is, 
the value of the unit of this article would be the unit 
of the measure of value of other articles of value. For 
illustration, if the article of most nearly stationary 
value consisted of horses, the unit of which is one 
horse, then the value of other articles would be ex- 
pressed in terms of horses, and would be of the value 
of one horse, two horses, or one-half of one horse, or 
two and one-half horses, as the case might be. 



98 FUNCTIONS OF GOVERNMENT. 

As to what information is conveyed when it is 
stated that a certain article is of a certain value ex- 
pressed in units of the standard, no doubt must be left. 
In discussing values hereinbefore, it was stated, that 
while theoretically there might be some articles that 
would remain unchanged in value during a period of 
years, yet, as a matter of fact it is altogether 
improbable that any article would remain ab- 
solutely stationary in value during any consid- 
erable period of time. Anything that may by 
custom be adopted as a standard, will, in all 
probability, change in value somewhat in time, 
though less so than other articles. If the standard 
should remain stationary in value, it would be an ideal 
one, since no injustice would result to him who stores 
any portion of his wealth in the form of the article con- 
stituting the standard; and since neither party to a 
time contract, payable in the article of the standard, 
would gain any undue advantage over the other in the 
fulfillment of the contract. 

If the standard remains stationary it may be repre- 
sented by a straight horizontal line, as was the theoret- 
ical article hereinbefore represented, as follows: 

But, in fact, any standard will, in all probability, 
vary by rising or falling, or both, during a certain 



MONEY-ITS iBVOLUflON, 



99 



period. If it should gradually and regularly rise in 
value, it may be represented by a straight line grad- 
ually and regularly ascending, as follows; the dotted 
line AB representing the ideal standard, and the con- 
tinuous line AC the real standard: 

.C 




If'it should gradually and regularly decrease in 
value, the above line AD might represent it. Should 
the standard both rise and fall during the period, it 
might be represented by the crooked line AE. 

Suppose a standard gradually and regularly rising 
in value, and let it be represented by a straight line 
gradually and regularly ascending as designated below 
by AC, the dotted line AB representing the ideal. As 
every article, as well as the standard, in all probabil- 
ity, varies in value during a certain period, let us sup- 
pose another article, wheat, for instance, gradually 
and regularly rising in value during the same period, 
but rising in value only one-half as much as the stand- 
ard, then it might be represented by the line AD. 



100 



FUNCTIONS OF GOVERNMENT. 



If the distance from B to 0, in the above diagram, 
represents two dollars, that is, if during the period rep- 
resented by the lines a certain quantity of standard 
has risen in value to the extent of two dollars, then, 
during the same period, since D is half way between B 
and 0, a certain quantity of wheat has risen in value 
only one dollar. 

At the beginning of the period represented by A, 
the quantity of wheat supposed was equal in value 
to the quantity of the standard supposed; but at the 
end of the period represented by B, and D, though 
wheat has risen in fact in value, yet, in terms of the 
standard it has fallen; because while at the beginning 
the wheat could have been exchanged for the standard, 
at the end the standard in exchange would command 
not only the wheat, but one dollar in addition; that is, 
the same quantity of standard buys more wheat, and 
the same wheat less standard. Suppose during the 
same period the standard to have fallen two dollars in 
value, and wheat to have fallen one dollar in value; 
then the condition might be represented as follows : 




AB designates the ideal, AC the real standard, AD 
wheat; the distance from B to represents two dol- 



MONEY— ITS EVOLUTION. 101 

lars, and the distance from B to D and C to D each rep- 
resent one dollar. In this case, though wheat has fall- 
en in value, yet its value expressed in terms of the 
standard has risen; for is it not apparent that at the 
end of the period the quantity of wheat supposed will 
exchange for the quantity of the standard supposed 
and also one dollar in addition; that is, wheat will 
command more standard and the standard less wheat? 
Suppose," during the period, the standard to rise one 
dollar and wheat to fall one dollar, it might be repre- 
sented as follows, AG representing the standard and 

AD wheat: 

_____^ 

— — D 

In terms of the standard, wheat has fallen two dol- 
lars, while in fact wheat has fallen one dollar, and the 
standard has risen one dollar. They are two dollars 
apart, but neither has changed to that extent. 

Is it not apparent, now, that when a standard is 
adopted and the value of a i^ing is expressed in terms 
of the standard at two different periods, that no idea 
is conveyed as to whether or not the thing has in- 
creased or decreased in value, but simply the informa- 
tion is conveyed that the values of the standard and 
of the article have not changed alike? Both may have 



102 FUNCTIONS OF GOVERNMENT. 

risen; both may have fallen, or one risen and one fall- 
en. The term simply shows how far the article is from 
the standard, nothing more and nothing less. 

While considering the subject of the standard of 
value, it may not be irrelevant to ascertain whether or 
not it is true — as so often stated in the public press 
and by public speakers — that there cannot be two 
standards of value. A moment's reflection ought to 
convince any one that the statement is not true, and 
that, in truth and fact, there may be as many stand- 
ards as there are different articles of value. A stand- 
ard is an article of value, with the value of which the 
value of another article is compared. Certainly the 
value of any article may be compared with the value 
of any other article, and when the value of a horse is 
compared with the value of a cow, then the value of 
the horse is the standard for the value of the cow, and 
of the cow for the horse. When, generally, the value 
of many things is compared with the value of one 
thing, then the value of the one thing becomes a gen- 
eral standard. 

For reasons hereinbefore shown, no general custom 
of comparing the values of things generally with the 
value of one thing will arise, unless the one thing is of 
comparatively stationary value. But there may be 
two or more articles of substantially equal stability of 



MONEY-ITS EVOLUTION. 103 

value, and much more stable in value than things in 
general; and for that reason, each of said two or more 
things may become to be used quite generally as stand- 
ards; and if such a custom should arise, then the value 
of other articles could be expressed in terms of any 
one or of all of those standards. For illustration, sup- 
pose every horse was of the same value as every other 
horse, and every cow of the same value as every other 
cow ; suppose one horse to be of the value of two cows, 
and suppose horses and cows to be generally used as 
standards of value; then, the value of any other article, 
could be expressed in terms of horses or cows, or both. 
For instance, it could be said that a certain building 
is of the value of fifty horses or one hundred cows, 
either or both; so, if gold and silver should become 
to be used as standards, it could be said that the build- 
ing is of the value of so much gold or so much silver, 
or both. 

To recapitulate, this article of most nearly station- 
ary value would be the principal one used for five pur- 
poses, as follows : 

First — For the storing of wealth. 

Second — For the payment of debts. 

Third — As an instrument of exchange. 

Fourth — As a standard of value. 

Fifth — As a unit of measure. 



104 FUNCTIONS OP GOVERNMENT. 

Thus far we have chiefly spoken of the quality of 
stability of value in this article. If there were two or 
more articles of equal stability of value, but differing 
in durability, then the one most durable would be most 
used for these five purposes. 

Again, if there were more than one article of equal 
stability and durability of value, the one easier to 
handle would be most used for these five purposes. 
But, of the articles equally stable, durable, and con- 
venient, if there were more than one, the quantity of 
one might be insufiScient to be generally used for these 
five purposes; while that of some others of the differ- 
ent articles might be sufficiently plentiful for general 
use for these five purposes. 

The subject of the quantity of the article or articles 
adopted for this purpose is a very important one, and 
perhaps not secondary to the subject of stability in 
value. The subject is especially of great importance 
in connection with the functions of the articles so 
adopted as a medium of exchange and as a commodity 
with which to pay debts, because when one or more 
things become to be generally used for these purposes 
nearly all contracts for payments will be made payable 
in them; and if, when the time of payment arrives 
there is an insufficient quantity of them in existence, 
then perhaps the contracts cannot be fulfilled. For 



MONEY— ITS EVOLUTION. 105 

illustration, suppose there are in the United States to- 
da}^ two billions in debts, payable in money, contracted 
upon the reliance that money would be in existence 
and obtainable in exchange for other species of prop- 
erty at the time that the debts became due. But sup- 
130se between the time of making the contracts and the 
time of payments all the money in the United States 
should pass out of existence; that there should be no 
money when the time of payments arrived, what would 
be the result? Under our laws where offsets of debts 
could not be made, payments being neglected, judg- 
ments would be obtained by the creditors against the 
debtors, and executions would be issued thereon and 
delivered to the sheriff, who would levy upon the 
debtor's property — as the debtor might have plenty of 
property, but no money — and take the same into his 
possession and advertise the same for sale to satisfy 
the judgment. Suppose all of the debtor's property, 
of the value of ten thousand dollars, to be levied upon 
to satisfy a judgment of one thousand dollars. Many 
persons might attend the sale, but no one but the cred- 
itor could bid at the sale, because any one else would 
have to pay money, and we are supposing no money to 
be in existence; therefore, no one but the creditor 
could bid; but if the creditor could have no competitor 
in bidding, and if the debtor could not redeem 



106 FUNCTIONS OF GOVEENMENT. 

from the sale, as he could not if there were no money 
in existence, then the creditor need not bid an amount 
equal to the amount of the debt to obtain the property ; 
that is, he need not bid even one thousand dollars for 
the property worth ten thousand dollars. The cred- 
itor would obtain the property as easily by merely bid- 
ding a nominal amount, say, one dollar; therefore, he 
would bid only a nominal amount, and the title of the 
property would pass from the debtor to the creditor, 
and the substantial portion of the debt still exist. 
That is to say, that with debts existing payable in 
money and no money existing with which to pay them, 
under the laws as they now exist, all the property of 
all debtors might pass to and become the property of 
the creditors, and the obligations of the debtors still 
exist. That is an alarming condition of things to con- 
template, but what is true in all of its fullness in the 
illustration must always be true in a lesser degree 
whenever there is an insufficiency of money, though 
not an entire absence of it. Besides, since money is 
almost exclusively used as the medium of exchange, 
whenever there is an insufficiency of money, exchanges 
must be curtailed to an extent about equal to the in- 
sufficiency of money. Reference to the evidences of an 
insufficiency in the volume of money will be made here- 
inafter. It is the present purpose only to show the 
importance of the subject 



MONEY— ITS EVOLUTION. 107 

If no one article possessed all of these advantages 
in the greatest degree, that is, of stability, durability, 
and convenience of form being sufficient in quantity, 
then that article would be used most which possessed 
all of these advantages in the most desirable propor- 
tion. Indeed, one article might be used most for some 
of these five purposes, and other articles for others of 
these five purposes concurrently and simultaneously, 
and if people differed in opinion as to the comparative 
desirability of the different articles for use for any of 
these five purposes, different articles might simultane- 
ously be used by different people. 

Not infrequently in the same community, as a mat- 
ter of fact, different articles have been simultaneously 
used for the same purpose. At different times in the 
same community, and in different communities at the 
same time, different articles have been used for these 
five purposes. Among the American Indians at one 
time, beads called "wampum" were generally used; 
among the American colonists in Virginia tobacco. 
From early historical times, continuously, down to 
and including the present, in the principal countries of 
the world, gold and silver have been and are generally 
used for these five purposes. 

This article, or these articles, as the case may be, 
which we have described as possessing the greatest ad- 



108 



FUNCTIONS OF GOVERNMENT. 



vantages for these purposes, and wliicli generally per- 
form these functions, are, when so used, what we now 
call money. Money may be defined to be those articles 
of value which are most generally used in a community 
with which to store wealth, pay debts, effect ex- 
changes, and as a standard of value and as a unit of 
measure thereof, and are so used because, in the opin- 
ion of those so employing them, they possess in a great- 
er degree than other articles the advantages of stabil- 
ity of value and durability of value, with convenience 
for use, and are sufficient in quantity. Of course, those 
same articles may be used for other purposes, but they 
only constitute money when used or are held to be used 
for said purposes. 

But gold and silver, now generally used as money 
in most countries, are not mined in convenient form 
to be used as money as mined; nor can the value of 
gold or silver be ascertained without weighing. They 
are elements of nature, and the value of them is pro- 
portionate to the weight, that is, the quantity ; nor has 
either a natural unit. The custom has grown up with 
the use of them as money of coining them for use as 
money, the coins being stamped to indicate their 
weight, thereby arbitrarily fixing a unit. This is con- 
venient and facilitates their use as money, because the 
means are not generally at hand to ascertain the 
weight when their use as money is desired. 



CHAPTER XI. 

MONEY (Continued). 

ECONOMICAL EXPEDIENTS AFFECTING THE 
VOLUME OF MONEY. 

Thus far having traced the course of money in its 
complete evolution, let us next observe some expedi- 
ents that are commonly resorted to in the interests of 
convenience and economy. 

Never has any article been found to be used as 
money that is wholly convenient in all amounts; also 
constant use of articles subjects them to danger of 
loss and causes wear, decrease of amount, and there- 
fore value is lessened. To avoid inconvenience, wear, 
and loss, the parties coining have resorted to the ex- 
pedient of depositing the coins in safety vaults and of 
issuing paper certificates therefor in different amounts 
to the full extent of the coins deposited. These cer- 
tificates are circulated instead of the coins deposited, 
and are convertible into coin at any time at the will of 
the holder. Indeed, if certificates are to be used in- 
stead of coins, no necessity of coining exists; but the 
metals uncoined could as well be deposited as the basis 



110 



FUNCTIONS OF GOVERNMENT. 



of the certificates; and if the certificate-holder there- 
after desired to exchange them for the metal, he could 
receive it uncoined as deposited, or procure it to be 
coined when desiring it in the form of coin. 

These considerations have led some to lament the 
"lying idle," as they say, of articles so valuable. But, 
in truth, the metal is not idle, but performing a very 
important function, that is, the function of money, as 
truly as though it were in circulation instead of the 
certificate, its representative. The metal is really the 
money, and the paper only evidence of its existence 
and location and readiness to be exchanged upon de- 
mand. The money is only idle when neither it nor the 
certificate is in use. 

These considerations carry us to the custom that 
prevails in banking. The custom is for individuals to 
deposit their money with the banker, and whenever the 
depositor desires to make a payment, instead of with- 
drawing the money deposited and making the payment 
therewith, he gives a check, that is, an order on the 
banker for the amount. The person receiving the 
check presents it at the bank and gets the money; or 
instead of withdrawing the money, he may have the 
banker charge the amount of the check to the giver 
thereof, and give him credit for the amount thereof, 
and he in turn, issues checks thereon. 



ECONOMICAL EXPEDIENTS AFFECTING, ETC. Ill 

So long as all the money deposited in the bank re- 
mains there subject to check by the depositor, the 
system and economy is the same as with the coiner and 
his certificate. The certificate in one case, and the 
check in the other, each represents money. They are 
conveniences and economical expedients to save wear 
and avoid loss of money. In this case the money de- 
posited with the banker is only idle when neither it nor 
the check is in use. 

But, by the prevailing custom of banking, the bank- 
er may not keep on deposit at all times all the money 
deposited with him subject to check, the custom hav- 
ing grown up, with the knowledge and consent of the 
depositors, of lending to others a portion thereof. Ex- 
perience has shown that all depositors will not give 
checks on their money at the same time ; that all who 
receive checks at the same time will not draw money 
on them, but part of them will inste'ad, deposit them 
to their credit; that while some may be drawing out 
money, others will be depositing; and so, in the or- 
dinary course of business, a banker may safely lend 
to others a portion of what the depositors have left 
with him subject to check, and the person to whom 
the banker lends the money may not withdraw the 
money, but, instead receive a credit at the bank for 
the amount, and may, himself, utilize the check sys- 



112 FUNCTIONS OF GOVERNMENT, 

tern. By this expedient, a certain quantity of money is 
utilized to a greater extent than it otherwise would 
be, it lies idle less. In this way, when not used by the 
depositor, it is used by the borrower. By this custom, 
in reality, the banker brings together at all times the 
lender and the borrower ; or, to speak more accurately, 
the banker borrows of the depositor and uses the 
money by lending to others. The banker assumes the 
risk of his loans, for which he receives a profit in the 
form of interest. 

Intimately connected with the banking system is 
the clearing-house system, instituted by the bankers. 
The system may perhaps be made clearer by illustra- 
tion than by explanation. Suppose several banks in a 
locality, each with different patrons. Suppose A to be 
a depositor of bank No. 1, and B of bank No. 2. Sup- 
pose that upon a certain day A gives B a check upon 
his bank, No. 1, for ten dollars; and later in the day 
B gives A a check upon his bank. No. 2, for ten dollars. 
When B received A's check of ten dollars he could 
have gone to A's bank, No. 1, and drawn the money 
upon it, and carried it over to his bank, No. 2, and 
there deposited it to his credit. And when A received 
B's check of ten dollars he could have gone to B's bank. 
No. 2, and drawn the money on it, and carried it over 
to his bank. No. 1, and there deposited the same to 



ECONOMICAL EXPEDIENTS AEFECTING, ETC. 113 

his credit. But, instead, under the clearing-house 
system, A's bank, No. 1, accepts from him B's check 
on bank No. 2, and gives A credit for it, the same as 
though it were money, the bank thereby agreeing to 
attend to getting the money on the check from bank 
No. 2; so, B's bank, No. 2, accepts from him A's check 
and gives him credit for the amount as though it were 
money. Thereafter representatives from banks No. 1 
and No. 2 meet and compare their records, upon which 
it is at once seen that instead of it being necessary to 
carry ten dollars from each bank to the other, that 
the same result is obtained by no money being carried, 
but by simply exchanging checks and balancing their 
accounts. If there is any difference in the amounts of 
the two checks, then money only to the extent of the 
difference need be carried from one bank to the other. 
The illustration is simple in theory, but in practice 
in any city where there are numerous banks, there are 
every day many checks, drawn on other banks, de- 
posited in each bank. By this clearing-house system 
the money lies in the vaults of the banks, not subjected 
to wear nor to danger of loss, and the banker is en- 
abled to lend more of the money deposited, thereby 
utilizing the money more, avoiding its lying idle more, 
and no doubt obviating the necessity of a larger vol- 
ume of money with which to do business, thus leaving 



114 PUNCTIONS OP GOVBRNMBNT. 

more of the precious metals, as gold and silver are 
called, free for use to satisfy other desires of man. 

This system of balancing accounts is not confined 
to banks of the same city, but is extended and applied 
by banks of different cities, thus avoiding carrying so 
much money both ways between cities. The principle 
is also extended and applied to international affairs. 
If it were not, between Europe and America, enormous 
amounts of money would be in transit both ways over 
the ocean; but with it, comparatively small amounts, 
balances, are carried one way. 

The extension of credit in private deals between 
individuals largely lessens the otherwise necessity for 
more money. To illustrate, a retail merchant trusts 
for months a patron. His patron may be a farmer, 
who, during the same time, is selling the merchant 
eggs, poultry, and other of his products upon credit. 
At certain intervals they compare accounts; if equal, 
they balance them ; if not equal they are balanced by 
the payment of the difference only. 

So far as the matter under consideration is con- 
cerned, the greater the honesty and the greater the ex- 
tent of credit, the greater is the economy, the less does 
any money lie idle, the less is money required to effect 
exchanges, thereby permitting more of the precious 
metals to be utilized for other desirable purposes. For 



ECONOMICAL EXPEDIENTS AFFECTINO, ETC. 115 

illustration, suppose there were no credit; suppose 
people would not entrust bankers with their deposits, 
or, if they did, that bankers would not extend credit 
to others by making loans to them; those who under 
present conditions are borrowers at banks would then 
have to keep money of their own with which to do 
business; and therefore have use of less capital in 
other forms, while the money of the depositors, or 
creditors, would lie idle. 

In other ways, also, honesty serves to economize in 
the use of money. A person may be actively engaged 
in business, with a capital of considerable value, and 
still be without money. The conduct of his business 
may be expensive and require the expenditure of mon- 
ey or the utilization of credit. With this valuable cap- 
ital and a reputation for honesty, in lieu of money, 
others, for labor or material which he may desire, may 
accept from him promises to pay money in the future. 
If these promises to pay be in writing, they are called 
notes. They may pass from person to person in mak- 
ing exchanges within the limit of the promisor's repu- 
tation for honesty and ability, or they may be held or 
stored until due, or they may be used by the receiver 
of them to pay his debts within the same radius. 

Again, a person may possess no capital, but he may 
bear the reputation of being capable, industrious, in- 



116 FUNCTIONS OF GOVERNMENT, 

telligent, and honest. Upon this potentiality, his writ- 
ten promise to pay may be accepted and become cur- 
rent to some extent where the maker is known, as do 
the certificate of the coiner and the check of the de- 
positor. 

In each of the cases of the certificate and check 
spoken of, the basis was money; in the cases of the 
notes spoken of, their bases were not money. In one 
case supposed, the basis was wealth in property other 
than money, that is, other than articles generally used 
for the five purposes; in the other case the basis was 
the potentiality of the man to earn money; but as in 
the cases of the certificate and check they are not 
money, but only representatives of money, so the notes 
spoken of are not money, but only the representatives 
of — not money, but something performing functions 
usually performed by money. 

It thus appears that money does not always per- 
form all of the functions usually performed by it. The 
more firmly the credit of a people is established, the 
less will money be utilized for certain purposes, but 
instead other things will be utilized. Where credit is 
good, money will not be stored to the extent that it 
otherwise would be, but instead interest-bearing se- 
curities. 

While in our illustrations to show how things other 
than money sometimes perform the functions usually 



ECONOMICAL EXPEDIENTS AFFECTING, JSTC. 117 

performed by money, we use in the one case a business 
man with capital, and in the other case a capable man 
without capital, but with a reputation for integrity, it 
is evident that the intention was that the two should 
be representative of all classes entitled to credit. For 
instance, the business man may be a banker. The 
banker might establish his credit to such an extent 
that his bank notes would circulate. The bank notes, 
however, would not be money as we have defined mon- 
ey, nor represent money, unless in the form of certifi- 
cates for money in his vaults, convertible into money 
upon demand; but, rather, the bank notes would rep- 
resent that which gave the banker credit, whether cap- 
ital or potentiality. This capital or potentiality, how- 
ever, would be performing some of those functions 
usually performed by money. 

So, should the government issue notes, that is, 
promises to pay money, because of its potentiality, that 
is its power to get money, its notes might circulate in 
proportion to the government's credit; but as money 
has been defined, its notes would not be money any 
more than the notes of private individuals; but, as in 
the other cases hereinbefore supposed, the govern- 
ment's credit used in the way supposed, would perform 
some of the functions usually performed by money, 
and lessen the use of money to the extent that its 
notes were used. 



118 PUNCTIONS OF GOVERNMENT. 

It may be said, that the notes of the individual and 
of the government, spoken of, are payable in money, 
and finally must be paid in money, and, therefore, their 
use does not, in the end, economize in the use of 
money. That is true so far as the notes are finally 
paid in money; but in the end many of such notes are 
settled by being offset against other notes or accounts, 
and no money is needed to satisfy them. To illustrate, 
suppose a firm operating a saw-mill gives its note of 
five hundred dollars to Mr. A in payment for some logs 
purchased of him. The mill firm sells five hundred dol- 
lars' worth of lumber to Mr. B, and accepts from him 
his note of five hundred dollars. The mill firm made 
this note which it gave to A payable at the bank where 
it did business, and in taking the note of five hundred 
dollars from B it made it payable at the same time and 
place, with the view of having one note offset the oth- 
er. A owed B five hundred dollars for supplies which 
B furnished to A when A got out the logs, and he took 
A's note for five hundred dollars; it became due a lit- 
tle before the mill company's note to him became due, 
so he went to B and got an extension of time of pay- 
ment. The notes were all left at the same bank for 
collection ; they offset each other, and not a dollar was 
paid. While the transaction of the illustration is an 
ideal one, yet, indeed, in the course of a year, in any 



ECONOMICAL EXPEDIENTS AFFECTING, ETC. 119 

country, a large number of notes are satisfied by being 
offset in whole or in part, and the use of money 
avoided. 

It is within the observation of everybody, that by 
reason of credit, people make their obligations payable 
at a time when they have money due them, so that 
they use the money paid them in paying their debts, 
the time of payment being, to a large extent, depend- 
ent upon the nature of the business of the community. 
In a farming community, the fall of the year is the 
great time for settlement. By this means one piece of 
money performs more functions in a shorter space of 
time than otherwise would be the case, and then goes 
elsewhere upon duty. The same money may move the 
logs in winter, the wool in the spring, and the wheat 
in the fall. Thus credit renders it unnecessary to with- 
draw from other beneficial uses, to be used as money, 
so much of the precious metals that otherv/ise would 
be necessary. 

In primitive communities, where, if honesty be not 
less prevalent, reputations therefor are less estab- 
lished, more money is necessary in proportion to the 
contracts made, than in older communities. The bet- 
ter the reputation for honesty of a community, the less 
the money required in proportion to the number of 
contracts executed therein. 



120 FUNCTIONS OF GOVERNMBNT. 

The percentage of the functions usually performed 
by money, grows less and less in all progressive na- 
tions. This is an established fact, and the reasons are 
herein set forth. If legislation did not interfere with 
natural laws and affect the volume of money, the more 
money there was in a community in proportion to the 
number of its contracts the worse it would be for the 
reputation of the community. Find a country with 
a large quantity of money in proportion to the number 
of its contracts, considering also the amounts involved 
in them, and you will find one where credit is poor. 

While we believe it is true that the quantity of 
money required in any community with which to do 
business grows less and less in proportion to the num- 
ber of its contracts as credits grow and extend in the 
community, yet that is far from saying that the ab- 
solute quantity of money would naturally grow less in 
all progressive communities. Some writers and public 
speakers have been wont to say that a less quantity of 
money is absolutely needed in a community where ex- 
tensive credits prevail than in other communities ; but 
the conclusion is not yet justified from any considera- 
tions hereinbefore advanced. It may be true that the 
greater the credit of a community the less the money 
that will be stored; but, in lieu thereof, interest-bear- 
ing securities. It may be true that the more the credit 



ECONOMICAL EXPEDIENTS AFFECTING, ETC. 121 

system prevails, the more will there be mutual ac- 
counts that in the end will be balanced without the 
use of money; and the more the banks will flourish, as 
more money will be deposited in them, and the more 
will they lend of depositors' money; and thus will less 
money lie idle than otherwise. 

All of the considerations hereinbefore advanced 
that tend to show a lessened demand for money with 
extension of credit may be true; and still it must be 
considered in this conn.ection, that along the lines 
upon which society has heretofore progressed, the in- 
terdependence of the people of a community increases, 
whether due to the division and constant subdivision 
of labor, occasioned certainly somewhat by reason of 
inventions, by means of which scarcely any one now 
produces a completed thing in any line of business, 
but instead only a part thereof, as may be instanced in 
the manufacture of shoes, in which business but a gen- 
eration ago one man made the completed article, while 
now the work of making one shoe is subdivided among 
many men; and as may further be instanced by the 
fact, that general practitioners in the professions of 
law and medicine are growing fewer, comparatively, 
while the members of the professions that practice dif- 
ferent specialties thereof are increasing proportion- 
ately, or whether or not this interdependence is due to 



122 FUNCTIONS OF GOVBRNMFNT. 

those things, the fact remains, by reason of which 
more and more exchanges are necessary all the time, 
more and more contracts are all the time made neces- 
sary in order to effect a certain amount of business. 
So, while it may be true that with the extension of 
credits, less money is required to effect a certain num- 
ber of exchanges, or to fulfill a certain number of con- 
tracts, still, along with the extension of credits grows 
a greater interdependence of people, by reason of 
which more exchanges and more contracts are neces- 
sary in proportion to the business accomplished, thus 
requiring more money. Which tendency overbalances 
the other it is difficult to tell. These considerations in 
themselves are not of very great importance, the im- 
portant matter being that there should be money 
enough, but they are here advanced only to show the 
unreliability of the conclusion of those who attempt to 
prove the sufficiency of the volume of money in any 
community by citing the per capita quantity, the fact 
being that there is no natural relation between 
quantity of money and the population, nor can 
any important truth be deduced therefrom, but rather 
the important relation exists between the quantity of 
money and the quantity of business, in connection 
with the manner in which the business is done. 

We have now briefly traced the evolution of money, 
considered what functions it performs, also, what 



ECONOMICAL EXPEDIENTS AFFECTING, ETC, 123 

qualities of gold and silver have caused them to be 
generally adopted to be used as money. We have con- 
sidered, too, certain expedients that economize the 
use of money, as well as certain tendencies that con- 
tinually demand the use of more money. 

With our present understanding of money and its 
functions, guided by the principles elucidated in the 
former chapters, we ought to be able to answer with 
certainty the first question asked upon this subject: 
"What functions, if any, has the government to per- 
form in regard to money?" 

Remembering the principles, that the rights of 
everybody are equal; that every one has the right to 
do as he can and wills to do, limited only by the equal 
right of every one else; remembering, also, that one 
of the duties of government is to maintain the rights 
of its citizens equal — never to destroy the equality, 
never to help one to the detriment of another, even 
upon the pretext that the one helped will help others 
or share the advantages, that is, not avail himself en- 
tirely of them; remembering, also, that the natural 
law of human nature demands, in the interests of the 
greatest progress, that individuals be allowed to help 
themselves as much as possible, and that they be 
helped as little as possible; remembering these prin- 
ciples, and understanding money and its functions, do 



124 FUNCTIONS OF GOVERNMENT. 

these considerations demand any action whatever 
upon the part of government relative to money? So 
far as considered, nothing has occurred requiring any 
action upon the part of government relative to money. 
In any community money would naturally develop in 
this way and for the reasons hereinbefore set forth, 
without any action upon the part of government. 

Take notice, that money consists of articles of 
man's desires that can only be obtained by labor, that 
is, of articles of value that are voluntarily generally 
used by individuals in their private relations for cer- 
tain purposes, because of their fitness. It is a creation 
of the individual in his private capacity, used by him 
in his private capacity; and in the creation and use 
by him of the same no one gains thereby any advan- 
tage over others. 

It therefore follows from the foregoing consider- 
ations, that governments have no functions whatever 
to perform relative to money. Let it be understood 
that there is not and never was an occasion to justify 
any action whatever upon the part of a government 
relative to money. No law upon the subject should 
ever have been passed. It necessarily follows that the 
tendency of all governmental action should be to- 
ward the repeal of all laws upon the subject. 



CHAPTER XIL 

MONEY (OoBtinued). 

GOVERNMENTAL ERRORS. 

Though we are certain the conclusion that a gov- 
ernment should perform no function relative to money 
is correct, still our government has ever interfered and 
performed certain acts relative to money. Let us re- 
fer to them and see whether or not any evil has re- 
sulted therefrom. 

In the first place, we may mention the fact that our 
government has ever coined money, and prohibited in- 
dividuals from so doing. This act of government is 
wrong. Why? Simply because there is nothing in the 
nature of the act that individuals could not as well do 
in their private capacities, and in the doing of the act 
no individual would thereby gain any advantage over 
others. Li coining money to the exclusion of indi- 
Tiduals, the government has usurped one of the natural 
rights of man. It has deprived him of one of his nat- 
ural occupations — the performance of an act that sub- 
serves his private ends; and thereby has the govern- 
ment limited the sphere of operation of the individual, 



126 FUNCTIONS €1- GOVERNMENT. 

limited his opportunities to develop himself. It may 
be said, if this is an evil it has produced no apprecia- 
ble effect, since there have been so many other oppor- 
tunities of which men could avail themselves that they 
have not suffered for lack of opportunities. This may 
be so, but if the act is wrong in principle it should not 
be perpetuated. 

Those who interpret the times the best, see that the 
tendency of our government is rather toward socialism 
than anarchy, rather toward doing too much than too 
little. So, if socialism is wrong and should not pre- 
vail, every insidious encroachment upon the rights of 
individuals should be checked, and the government put 
upon the right course, as surely as the government 
should be corrected in case of neglect by it to do its 
duty in the proper case. 

Before people will accept coins there must be ab- 
solute confidence in the ability and integrity of the 
coiner. Trade now encircles the globe; and for a coin 
to be current the world over, the reputation of the 
coiner for integrity and ability must be coextensive 
with trade. Had not the government prohibited in- 
dividuals from coining the metals into money, no 
doubt some enterprising individuals or firms would 
have acquired reputations before this that would have 
ensured the circulation of their coins throughout the 



GOVERNMENTAL ERRORS. 127 

commercial world. Had there not been any govern- 
ment interference, the reputation of individuals or 
firms would have been developed with trade and have 
been coextensive with it; but as it is, world-wide trade 
exists without the reputations of individuals as reli- 
able coiners of money going with it. If individuals 
were free from now to coin, years would probably be 
consumed in establishing sufficient reputations to 
guarantee the circulation of their coins. 

The reputations of old established governments is 
sufficient to guarantee a circulation of their coins; and 
that trade might not be hindered, governments should 
continue to coin money until the reputations of indi- 
viduals or firms are sufficiently established to gain the 
circulation of their coins, but only until then should 
governments continue to coin money, and they should 
immediately remove all restrictions as to coining 
money now resting upon individuals. Punishment 
could as well be inflicted for counterfeiting coins made 
by individuals as by governments. 

In an inquiry upon the subject of the government's 
duties in regard to money, people should not be con- 
fused on the subject simply because the government 
has financial matters to attend to. The government 
has certain proper functions to perform, and in per- 
forming those functions it necessarily incurs expenses 



128 FUNCTIONS OF GOVERNMENT. 

that must be paid. But to pay those expenses, the 
government is not justified in going into the mining 
business upon its own account and in producing its 
money in that way, and thereby encroaching upon the 
rights of its citizens. The proper way for it to obtain 
money with which to pay its bills is to raise it by taxa- 
tion, a subject to be hereinafter discussed. The gov- 
ernment should allow its citizens to conduct the indus- 
tries, and then levy taxes upon equitable principles. The 
business of the government should be conducted upon 
business principles; and all of the resources of the na- 
tion are subject to taxation. Except in cases of emerg- 
ency, possibly, .the government should at all times 
raise by taxation enough money to defray its ex- 
penses, and if, in an emergency, a debt is incurred, it 
should, as any business concern should do under the 
circumstances, pay the debt at the earliest convenient 
moment, if it cannot pay it when it becomes due. 

Because the government may give its notes, as an 
individual may do, in cases of emergency, and because 
those notes may represent a potentiality which may 
4)erform some of the functions usually performed by 
money, as do the notes of individuals sometimes, no 
reason exists why a government should not pay its 
notes with money as individuals must do; nor is there 
any more reason why the government should run in 



OOVERNMENTAL ERRORS. 129 

debt and issue notes or perpetuate the same for the 
sole purpose that they may be used as representatives 
of the potentiality that may perform functions usually 
performed by money than that an individual should do 
the same thing. 

As a matter of business, what should our govern- 
ment do with its notes called "greenbacks" that are 
issues or reissues of war times?. These are evidences 
of debts of the government as surely as notes of pri- 
vate individuals would be. They do not bear interest, 
but the government has a large indebtedness which 
does bear interest, evidenced by its bonds. Which 
should the government do first, pay its non-interest or 
interest-bearing obligations? What would a private 
individual do under the same circumstances? Pay 
those debts first which bear interest. But the green- 
backs, that is, the non-interest bearing notes, are pay- 
able on demand, therefore it should, if it can, pay them 
when demanded, but not pay them unless demanded 
until all of its debts that bear interest are paid. And 
it is a certainty that the government should provide 
for the payment of said obligations payable upon de- 
mand, towit, the greenbacks, as fast as payment there- 
for is demanded. Some have advocated the policy that 
the government call them in and pay them, not in 
money, but in interest-bearing bonds, which would not 



130 FUNCTIONS OF GOVERNMENT. 

circulate as greenbacks do. But it is objectionable to 
increase our interest-bearing national debt for reasons 
hereinafter stated. The greenbacks should be paid in 
coin. It has been suggested that to pay the green- 
backs in coin would lessen the volume of currency as 
well as would t]ie method of payment of the green- 
backs in bonds that would not circulate, because it is 
said that the coin to be used in payment of the green- 
backs would be drawn out of circulation in the first 
place by the government in procuring the coin by taxa- 
tion with which to pay the greenbacks; but certainly, 
under the right of free coinage such as advocated here- 
inafter, the volume of circulating medium would 
not be lessened to the detriment of any one 
whether the greenbacks were paid in bonds or 
coin, because under the right of free coinage, 
if the demand of the government for coin 
enough with which to pay the greenbacks re- 
duced the volume of coins below what the general de- 
mand called for, or if the retirement of the greenbacks 
by the issuance of bonds in their stead reduced the cir- 
culating medium too low, it would be immediately re- 
placed by additional coinage. 

It is time for the government to pay its debts, both 
interest and non-interest bearing. What would be 
thought of an individual with unlimited resources that 



GOVERNMENTAL ERRORS. 131 

allowed his debts to run for over thirty years, even 
though the creditors were willing to extend them? 

During the war the government drafted individuals 
and put them in the front to suppress the rebellion at 
the expense of their lives, and had it not been that 
there was more regard for the property then in the 
United States than for the lives of many of its citizens 
it would have drafted, that is taxed, values as it did 
men, and no debts would have been contracted. But 
the tax payers influenced the legislators to believe jus- 
tice demanded that the financial burden of the war 
should be borne, in part, at least, by future genera- 
tions. There are grounds for grave doubts as to the, 
justice of such a policy, but, whether the policy be a 
just one or not, a generation has passed since the war, 
and though nominally the w^ar debt has been some- 
what reduced, still it is estimated that by the present 
standard, so much increased in value, as evidenced by 
cheap prices generally, the burden of the debt has not 
been lessened. What generation should pay the war 
debt? It cannot be that the present parents of the 
United States desire to saddle this debt upon their 
children or grandchildren. When they become con- 
scious of the situation, they will insist upon the pay- 
ment of this debt whether the standard be first re- 
duced to its value at the time the debts were contract- 
ed or not. 



132 



FUNCTIONS OF GOVERNMENT, 



While the pretense of those who seek to perpetuate 
the national debt is that justice demands that its bur- 
den be divided and borne in part by the different gen- 
erations, in all probability, the real reason of their po- 
sition is that they desire the privilege of owning in- 
terest bearing United States obligations; especially is 
this probable, in view of the existence of the present 
national banking act. By this act, still in operation, 
corporations organized under it may buy interest bear- 
ing bonds of the United States and deposit them with 
the government at Washington and draw interest on 
them, and may, by reason thereof, issue notes, which 
by the same act are legal tender equally with money, to 
the extent of ninety per cent of United States bonds 
owned and deposited by them, the payment of which 
notes is guaranteed by the United States, and upon the 
issue of such notes such banks can charge interest 
thereupon, thereby realizing double interest upon a 
certain amount of their capital. 

For illustration, suppose a national bank to buy 
1100,000 worth of United States bonds and deposit 
them with the government. The bank then will re- 
ceive interest from the government thereupon, and 
then the bank may issue of its own notes |90,000 
worth in amount, that is, make its own notes to the 
amount of |90,000 serviceable as money and charge in- 
terest thereon when loaning the same. 



I 



GOVERNMENTAL ERRORS. 13X 

The people interested in the present United States 
banks advocate the perpetuation and extension of this 
system. They advocate the conversion of the non-in- 
terest-bearing greenbacks into interest-bearing bonds 
of the United States, that they may buy and own them, 
that they may draw double interest upon their money. 

It is the history of all nations that national debts 
once created are not only perpetuated, but increased 
continually in amount instead of lessened and paid. 
This fact is evidence that the creditor class controls 
the legislation of the world, as such a system inures to 
their benefit, to the detriment of the other class. There- 
fore, let the demand go forth for the payment of the 
United States debts, greenbacks upon demand, but 
otherwise interest-bearing bonds first. With the pay- 
ment of the bonds down will go the national banking 
system, of necessity, if it be not sooner terminated. 

The act of coining money by the government is the 
least of the wrongs that the government has com- 
mitted in relation to the money question. What oth- 
ers are there? Reference will only be made to enough 
of them to impress upon the reader the necessity of 
adopting the method herein contended for. 

The government started out wrong. The original 
coining act of 1792 violated a natural law in other re- 
spects than in attempting to coin money. After provid- 



134 FUNCTIONS OP GOVERNMBNT. 

ing for the free coinage by the United States of both 
gold and silver coins, it provided in Section 11 of the 
act as follows : 

"That the proportional value of gold to silver in all 
coins which shall by law be current as money within 
the United States shall be as fifteen to one, according 
to quantity in weight of pure gold or pure silver; that 
is to say, every fifteen pounds weight of pure silver 
shall be equal in value in all payments with one pound 
weight of pure gold, and so in proportion as to any 
greater or less quantity of the respective metals." 

Section 16 of the same act provided as follows. 

"That all the gold and silver coins which shall have 
been struck off and issued from the said mint shall be 
a lawful tender in all payments whatsoever, that is, of 
full weight according to the respective values herein- 
before declared, and those of less than full weight at 
values proportionately to their respective weights:" 

The act was equally as absurd as would be an act 
declaring that every cow bearing a government stamp 
should be equal in value to a horse bearing a govern- 
ment stamp. The values of gold and silver, horses, 
cows, everything, is controlled by the law of supply 
and demand; and if at the time of the passage of 
such a law so much silver was equal in value 
to so much gold, or a cow equal in value to a horse, as 



GOVERNMENTAL ERRORS. 135 

the case miglit be, then while remaining equal the law 
would have no injurious effect, nor be productive of 
any good. But what would be the effect of the law 
when, notwithstanding the law, the values of the 
things should become different? But, first, it may be 
said, as some contend, that with such an act the values 
could not become different. Some assert that such an 
act creates an unlimited demand for both gold and sil- 
ver, wiiich fact in itself would keep the values to- 
gether as established by the act Let us see if this 
can be so. We know it cannot be so, because we know 
that the value of anything and everything depends, not 
alone upon one thing, but two things; not alone upon 
demand, but upon demand and supply. The supply of 
anything might so change as to offset or more than 
offset any change in demand. We can imagine an un- 
limited supply to wholly offset an unlimited demand, 
whereby an article would become valueless, notwith- 
standing an unlimited demand; but a free coinage act 
does not create an unlimited demand. Under such a 
law as the one of 1792, proAiding for the free coinage 
of both gold and silver as presented at the mint, pro- 
viding also a ratio of value between them, and provid- 
ing that both, when coined, shall be a legal tender in 
all payments whatsoever, there is not an unlimited de- 
mand. 



136 FUNCTIONS OF GOVERNMENT. 

Free coinage is not unlimited coinage. There is a 
limit to the amount of money that can be utilized. 
Suppose the real ratio of value of gold and silver estab- 
lished by the law of supply and demand to be fifteen to 
one at the time such a law as that of 1792 was passed, 
and suppose for a time after the passage of the act the 
demand and supply of both gold and silver to continue 
as at the time of the passage thereof. During the same 
time it would really be the general demand, in connec- 
tion with supply of the metals, and not the act, that 
would fix their values. Suppose later the supply of 
silver to be so increased as to lessen its value and then 
to be produced and coined at a faster and greater rate, 
but gold to be only presented for coinage at the regu- 
lar rate, and suppose silver to be coined faster than 
needed by business, but that people would not ex- 
change other property for silver coins any faster than 
at the time of the passage of the act; suppose this 
condition to be kept up for a considerable period; the 
result would be that there w^ould accumulate in the 
hands of those who coined the silver a surplus of sil- 
ver coins. Silver coins would thereby increase in pro- 
portion, while other gold coins would not so increase. 
As a result, when those who coined silver competed 
with those who coined gold, in the purchase of other 
property, those who coined silver could outbid those 



GOVERNMENTAL ERRORS. 137 

who coined gold. To get the other property desired, 
those who possessed the silver coins could give more 
silver coins for the article than those who coined gold 
coins could give gold coins therefor; as a result, the 
prices of things would rise, and as the different silver 
producers, with their stock of silver continually in- 
creasing, entered into competition with each other for 
the purchase of other species of property, they would 
bid over each other, and thereby drive the prices of 
such articles continually higher, and the greater the 
supply of silver the higher the prices would rise, until 
perhaps the greatest amount of silver would purchase 
but the smallest amount of other property. Of course, 
all existing obligations would be paid in silver, but 
there would be a limit to existing obligations; and as 
silver would command less and less all the time of 
other things, new obligations w^ould demand more and 
more silver all the time; as a result, gold would not be 
used in business, and all prices would be fixed on the 
basis of the value of silver, as fixed by natural laws, 
and not as the statutory law had attempted to fix it, 
and the prices might continue to rise until no amount 
of silver would buy any amount of anything else of 
value. In other words, the demand for silver as 
money, even under the free coinage act supposed, 
would entirely cease, and silver have no real value 



138 FUNCTIONS OF GOVERNMENT. 

whatever. In other words, under facts as above 
stated, the natural laws of supply and demand, and 
not the statutory law, would regulate the value. 

It may be said that the illustration is valueless to 
aid in the solution of the real question, because in fact 
no such supply of silver exists; but, in truth, the illus- 
tration is of value, because it will be observed that the 
prices of things began to go up the moment that silver 
began to be coined at a greater comparative rate than 
at the time of the passage of the law. That is, the rel- 
ative value of silver with the value of other articles 
began to change the moment the increased rate of coin- 
age of silver began, and. in this case the relative value 
changed because of the increased production of silver. 
The truth is that silver decreased in value, .as evi- 
denced by the increased price of other articles, not- 
withstanding the statutory law. In other words, no 
statute can effectually contravene the natural law and 
control the value; at least, it cannot by passing a law 
affecting demand only; but to do so it would have to 
pass a law affecting both supply and demand. No one 
has yet even suggested a law prohibiting the pro- 
duction of any natural product for the purpose of con- 
trolling the value of so much of the article as already 
produced ; certainly the law of 1792 did not contain any 
such provision. 



GOVERNMENTAL ERRORS. 139 

From what has already been said, it is evident that 
not only will a law attempting to establish a ratio fail 
to maintain it, but also that if the real ratio shall differ 
from that attempted to be established by the act, that 
the metal overestimated in value by the law will drive 
the other out of circulation as money. This can be 
shown in another way. 

Suppose a law, as that of 1792, to establish gold 
and silver both as legal tender money, and establish a 
ratio between them of fifteen to one; suppose there- 
after, by reason of an increase in the production of 
gold, it to become of less value, as compared with silver, 
than when at the ratio of fifteen to one. For illustration, 
suppose fifteen ounces of silver to become worth two 
ounces of gold, that is to say, suppose a condition of 
things under which it would be equally profitable to 
produce fifteen ounces of silver or two ounces of, gold, 
or more expensive to produce sixteen ounces of silver 
than one ounce of gold, then, under such a condition of 
things, no one would produce sixteen ounces of silver to 
be used for apurpose that could as well beaccomplished 
by the use of one ounce of gold; therefore, gold alone 
would be coined to be used as money, and silver would 
be used not for money, but in the arts and in other 
ways where demanded. 

It is certain that two metals will not remain in cir- 
culation as money where a ratio is established by law 



140 FUNCTIONS OF GOVERNMENT. 

and coins of both metals are made legal tender, unless 
the real values correspond with the legal ratio. 

The privilege of free coinage of gold and silver at 
the United States mint existed until 1873, in which 
year a law was passed prohibiting thereafter the 
further coinage of standard silver dollars, as those 
theretofore provided for were called. From 1792 until 
the passage of this law of 1873, from the information 
at hand, it may be stated that the ratio of value be- 
tween gold and silver did not remain at fifteen to one, 
but ranged from fifteen to one to seventeen to one. 
From the considerations hereinbefore advanced, this 
was due to the natural laws of supply and demand, and 
the law of 1792 did not prevent it ; as a result, history 
proves also that, during the period from 1792 to 1873, 
when the real values differed from that declared in the 
act, the metal under-estimated by the act went out of 
circulation as money. 

The values of gold and silver, then, in 1873, when 
the law before referred to was enacted, stood as cre- 
ated and controlled by the then supply and demand of 
them. One source of demand for silver at that time 
was for silver dollars. By the act of 1873, the coinage 
of standard silver dollars Wc^s thereafter prohibited, of 
necessity, therefore, by natural laws, what must have 
been the effect of that law upon the values of gold and 



GOVERNMENTAL ERRORS. 141 

silver? By that law thereafter there was a less de- 
mand for silver, and because thereof gold was called 
upon to perform more of the functions that thereto- 
fore both gold and silver had performed. There was 
an increased demand for gold, therefore gold must 
have increased in value and silver decreased in value, 
unless simultaneously therewith there were incidental 
changes in the supply of gold and silver that offset the 
changes in the demand therefor. Any one, then, 
standing in 1873 and looking into future years, could 
have seen gold rise and silver fall in value, barring 
offsetting changes in supply. Since by that act there- 
after gold was to be the legal standard, that is, values 
of other things were to be compared with and ex- 
pressed in terms of gold, the man looking into the 
future could have seen the value of gold parting com- 
pany with the values of other articles, that is, their 
values going further and further apart on account of 
the increase in the value of gold, and, as a result, that 
it would take more and more of other articles to get a 
certain amount of gold, that is, the prices of other arti- 
cles would all the time continually decline. Such a 
condition of things could a man in 1873, guided by the 
light furnished by a knowledge of the laws of supply 
and demand, have discerned in the future. 

Time now having elapsed, we can see whether or 
not experience has proved what might have been pre- 



142 FUNCTIONS OF GOVERNMENT. 

dieted. Barring the effects that were produced by two 
different special silver purchasing acts, to be herein- 
after referred to, history has proved the truth of what 
might have been predicted. It is an indisputable fact 
that the prices of things generally since then have 
gradually declined, and we know that it must have 
been caused, in part at least, by the increased value of 
gold. Why do we know this? Because the law of 
1873 increased the use of and demand for gold, and, 
therefore, must have increased the value thereof in the 
absence of any offsetting increased supply thereof. An 
increased value of gold, which is the standard, would 
be evidenced by a decrease of the prices of other 
things generally, and the prices of things generally 
having decreased, it is very probable that no increased 
supply of gold offset the effect of the increased de- 
mand therefor, caused by the law of 1873, but that the 
decreased price of things generally is due to an in- 
creased value of gold. Again, a condition of decreased 
prices is "a fact; increased demand for the standard is 
a fact also and contsitutes a sufficient cause for the 
condition of decreased prices; therefore, in the ab- 
sence of the known operation of any other cause, it be- 
comes probable that the cause known to be in opera- 
tion was the producing cause. 

True it is that had gold remained stationary in 
value and the value of other things generally have de- 



1 



GOVERNMENTAL ERRORS. 143 

creased, that decreased prices would have resulted 
therefrom, but it is much more improbable that gold 
has remained stationary in value and that things gen- 
erally have decreased in value than that gold has in- 
creased and things generally remained stationary, 
since it is more improbable that many things would 
change much than that one thing should so change, 
and especially when, as in this case, there is a cause 
known to be in operation sufficient to produce such a 
change in the one thing. 

What injustice, if any, has been caused by this? 
At the time of the passage of this act of 1873 our na- 
tional debt amounted to billions of dollars, payable in 
coin. It was a debt principally created in suppressing 
the rebellion from 1861 to 1865, and at the time the 
debt was created the coins consisted of both gold and 
silver. Besides the large national debt then existing, 
there were large state, county, city, township and 
school district debts, besides extensive private indebt- 
edness, many with long standing periods of time to run 
before becoming due. In no country, in no equal 
period of time, has there ever been such business activ- 
ity as within the United States between 1873 and the 
present, and, as a result, all indebtedness, with the ex- 
ception of national, and, perhaps, of some state debts, 
has been largely increased. With this condition of 



144 FUNCTIONS OF GOVERNMENT, 

things existing since, what has been the effect of the 
passage of this law of 1873? Since gold went up, as 
must have been the case, and as evidenced bj the fact 
that the prices of things generally went down, more 
of the products generally had to be sold to raise 
enough money with which to pay debts when they be- 
came due than had to be sold to raise money to loan at 
the time the debts were contracted. In other words, 
every debt of every character then existing and since 
contracted, extending over any considerable period of 
time, has substantially been increased in amount to the 
extent that gold has risen in value, that is, to the ex- 
tent that the jjrices of things generally have declined. 
But the fact that the act of 1873 has increased the 
burden of every debt, is not the only charge that can 
be laid at its door. Nearly, if not quite, as important 
as the fact that the standard should remain stationary 
in value is the matter that there should be a sufficient 
quantity of the medium of exchange that trade may be 
unhampered. In this connection, remember the illus- 
tration hereinbefore given, whereby it was shown that 
with debts contracted and a total extinction of money, 
that all the property of the debtor might pass to the 
creditor and the debts still exist, and shown also that 
the same process, only to a lesser degree, operated 
whenever there was an insufficient volume of money, 
though not an entire want of it. 



GOVERNMENTAL ERRORS. 145 

It is said that there is at present an insufficient vol- 
ume of money, and the cause thereof is attributed to 
the same act of 1873. How can we ascertain whether 
or not there is an insufficient volume? While it may 
be true as to any one particular article, that there may 
be produced of it at a particular time, even under 
natural laws, more of it than there is a demand for, 
still as to things generally, where natural laws are 
free to operate, the supply of them will just about 
meet the demand therefor, not much fall short 
of it nor much exceed it. Therefore, whenever 
one has a debt coming due, if he has an^^ product on 
hand he should have no difficulty in selling it to pro- 
cure money with which to pay his debt; when- 
ever there is any difficulty in that respect, 
then, certainly, there is an insufficient volume 
of money in circulation, due either to an insufficiency 
of volume or to a rising standard which encourages 
hoarding, because with such a standard profits can 
be realized in hoarding without hazards incident 
to use. But what has been the fact in this regard 
of late years? It cannot be successfully contradicted 
but what of late years there has been great difficulty 
in selling products generally. There has been no scar- 
city of products to sell, but instead a great stagnation 
of sales. Granaries, warehouses, and stores have burst 



146 FUNCTIONS OF GOVERNMENT. 

from pressure within. The owners of the products, 
too, have been debtors, anxious to sell that they might 
raise money with which to pay their debts, yet sales 
have been comparatively limited because people who 
wished to buy could not buy because they could not 
sell their products, and thereby obtain money with 
which to buy. Therefore, if our criterion is right, there 
is and has been an insufficient volume of currency, 
w^hich, in part, at least, has been the cause of the in- 
dustrial depression. 

Has the act of 1873 been an integral factor in pro- 
ducing this most lamentable condition of things? It 
prohibited the coinage of the standard silver dollars; 
it prohibited the free use as money of one of the two 
chief products that had theretofore been used as mon- 
ey by all of the leading nations of the world since early 
biblical times; and the fact is indisputable that there 
has been ever since the prohibitory act was passed, a 
sufficient quantity of silver to have supplied any de- 
mand that might otherwise have been made upon it 
for use as money; therefore, it is true, that had not 
the operation of the natural laws of supply and de- 
mand been interfered with by the act in question, that 
enough silver would have been coined to have met the 
demand for silver money, and certainly, silver money 
is better than no money. To the act of 1873, then. 



GOVERNMENTAL ERRORS. 147 

must be attributed the facts that the burden of every 
debt has been increased and the volume of money has 
been reduced below the demands of business, and sub- 
sequent hard times have been caused, in part at least, 
by the passage of that law. 

Some have said that from 1792 to 1873 only about 
five million dollars of standard silver dollar coins had 
been made, and that none of them were in circulation 
in 1873, therefore, no demand w^ould have existed 
thereafter for them in the absence of the act of 1873. 
But, certainly, that is not so if gold w^ould have in- 
creased any in value without the act. It is said that 
when the act was passed that silver was a little more 
valuable, as compared with gold, than as fixed by the 
legal ratio theretofore existing; if that was so, it ac- 
counts for the fact, if it were a fact, that silver was 
not in circulation, as shown by the illustration herein- 
before contained, where silver drove gold out of cir- 
culation when silver coinage increased faster than 
gold coinage under the fixed legal ratio. 

But though only five million dollars in standard 
silver dollars had theretofore been coined, and those 
were not in circulation, still, if the act of 1873 had not 
been passed, if gold had increased in value and be- 
come equal to and then exceeded the value of silver 
as fixed by the ratio, then, immediately, the demand 



148 FUNCTIONS OF GOVERNMENT. 

for silver dollars would have begun and they would 
have been coined, and their circulation thereafter fol- 
lowed, until gold might thereafter again have fallen 
down to or below the value of silver at the fixed legal 
ratio. 

Is it to be wondered at, then, that the passage of 
the law referred to has been denominated the "Crime 
of 1873?" Probably but few acts, if any other single 
act in the history of legislation of the world, have 
ever caused so much injustice. In this connection the 
motives of those who instigated the legislation is at 
least a subject of interesting inquiry. 

In 1867, soon after our war closed, when our 
national debt was very large, as well as the debts of 
the nations of the old world; when silver was worth 
no less than gold at the then ratio fixed by law, and it 
is said, was worth a little more than gold at that ratio, 
a monetary conference, so-called, was held in Paris, 
attended by influential legislators of many of the lead- 
ing nations of the world that were in debt. It was 
decided by those in conference that they would each 
go home to their respective nations and use their in- 
fluence to demonetize silver. Our act of 1873 was the 
result in the United States. Following this conference 
of 1867, several of said countries represented at the 
conference, passed similar acts demonetizing silver in 



GOVERNMENTAL ERRORS. 149 

their countries. The effect has been told. It benefited 
to an enormous extent, the creditors of the world, to 
the detriment, to an equal extent, of the debtors. It 
cannot be thought for a moment that the conference 
was called without design, nor can it be said that the 
debtors called it and controlled its action. There was 
no public demand for the conference, nor for the pas- 
sage of the acts referred to following the conference, 
nor any serious evils in regard to money calling for 
remedy. If there was an evil in this country 
in 1873 calling for remedy, it related to the re- 
sumption of specie payment, that is, to the pay- 
ment in coin of the government notes issued 
during the war. But certainly, no one could 
have thought that it would be easier or more 
conducive to justice, for our government to pay its 
debts in coin after demonetizing one of the principal 
metals then and theretofore coined into money. It 
certainly made it harder instead of easier, and pro- 
duced injustice instead of justice. It is therefore prob- 
able that a comparatively few shrewd men, being the 
principal creditors of the world, foresaw that by the 
demonetization of one of the principal metals and the 
establishment by law of a single standard, thereby im- 
posing upon a single standard the duty of performing 
the functions that theretofore had been performed by 



150 FUNCTIONS OF GOVERNMENT. 

two metals, thus increasing the demand for and there- 
fore the value of the metal of the single standard in 
the absence of any incidental off-setting change in its 
supply, they would gain to the extent that the single 
standard increased in value. Probably these men, in 
their own interest, induced the calling of the confer- 
ence, and influenced the members of the conference to 
pursue the course which they did pursue, and which, 
has resulted so beneficially to the creditors and so dis- 
astrously to the debtors and so demoralizing to the 
best interests of the country at large. In the absence 
of satisfactory proof to the contrary, no member of the 
conference or of the legislative bodies of the respective 
countries represented at the conference, should be ac- 
cused of intentional wrong in performing any instru- 
mental act in the matter; but, instead, mistake in 
judgment upon their part is presumable. But, what- 
ever it was, the results are the same. 

Some may wonder what it was that determined the 
creditors, if they did instigate the actions, as they 
probably did, as to which, gold or silver, they would 
try to have establi-shed by law as the single standard. 
It is certain that the demonetization of gold and the 
establishment of silver as the single standard would 
have benefited them; it would have increased the 
value of silver, as it did the value of gold, by increas- 



GOVERNMENTAL ERRORS. 151 

ing the extent of its use and therefore the demand for 
it. The question must have been agitated by them, 
''Which will benefit us the more?" They must have 
concluded to demonetize silver upon considering that 
the quantity of silver was much more than that of 
gold, and its value in proportion to its quantity much 
less, and because thereof there was less danger of any 
incidental increased supply of gold to offset the ten- 
dency of gold to increase by reason of a greater de- 
mand, than there would be of an incidental increase of 
supply of silver to offset the tendency of silver to in- 
crease in value by reason of an increased demand 
therefor. 

As stated by way of exception, subsequent to 1873 
there were passed two laws providing for the purchase 
of silver by our government. One was passed in 1878 
and the other in 1890, but neither are now operative. 
They provided substantially for the purchase by the 
government of certain quantities of silver bullion at 
the market price, and for the coinage of the bullion so 
purchased into silver dollars to be issued by the gov- 
ernment. Of course one result of compliance with the 
terms of these laws was an increased demand for silver 
bullion, whereby the value thereof was increased ; and 
another result was an increase in the amount of our 
circulating medium. They, therefore, somewhat offset 



152 FUNCTIONS OF GOVERNMENT. 

for a time the opposite tendency caused by the law of 
1873, and postponed the coming of all the evils that 
were destined to follow that legislation. As some 
poisons are antidotes to others, so this vicious 
legislation somewhat offset for a time the vice of the 
act demonetizing silver. 

That it is vicious under normal conditions for a gov- 
ernment to buy silver, there can be no question. That 
the congress that passed the last of the two acts in 
question knew it to be so there can be no question, 
because it is an open secret that it was caused by a 
corrupt deal and understanding between the members 
of congress representing different sections of the Unit- 
ed States. Kepresentatives and senators in congress 
in certain sections wished to pass a "protective tariff" 
law by which silver purchasers received no benefit in 
their business; and representatives and senators in 
congress from certain other states wished to pass laws 
directing the government to purchase silver to benefit 
the silver producers of their constituents. Neither 
wing would help the other without the favor were re- 
ciprocated, and the understanding was reached that 
each would vote for the vicious legislation proposed by 
the other. Each did so, and as a result their favorite 
measures both became laws. 



GOVERNMENTAL ERRORS. 153 

If it is not wrong to buy silver, why would it not be 
right to buy wheat, cotton, anything, everything? If 
what we call a principle, be a truth, that the rights of 
all are equal, and that it is the duty of a government 
to maintain that equality of rights, then, certainly, no 
government should do any acts to help any of its cit- 
izens to the detriment of its other citizens. 

Reflecting upon what was said in a preceding chap- 
ter, it will be seen that the silver purchasing acts were 
socialistic in tendency. In another connection, more 
will be said relative to protection and other laws de- 
signed to help some, and thereby, of necessity, injure 
others. 



CHAPTER XIII. 

MONEY (Continued). 

FREE COINAGE. 

The platforms of the different parties that support- 
ed William J. Bryan for president of the United States 
in the recent national campaign, all contained planks 
substantially demanding an immediate restoration of 
the free and unlimited coinage of gold and silver at 
the present ratio of sixteen to one. The platforms all 
contemplated, and some of them expressed it, that the 
silver dollars so coined should be a legal tender, 
equally with gold, for all debts, public and private, 
past and future.' 

Should such a law be enacted and put into opera- 
tion, many of the functions of money now performed 
by gold would then be performed by silver; the effect 
of this would be, that thereby the demand for gold 
would be lessened and the demand for silver increased, 
and as a result gold would decrease and silver increase 
in value. 

During the campaign, it was contended by many of 
the supporters of Mr. Bryan, that the processes of gold 



FREE COINAGE. 155 

declining and silver increasing in value, following such 
a law, would continue until the values of gold and 
silver would meet at the ratio of sixteen to one, that is, 
continue until, for illustration, sixteen ounces of silver 
would become equal in value to one ounce of gold, and 
there remain. 

That gold would decline in value, and silver in- 
crease in value, from the operation of the natural laws 
of supply and demand, is certain; but that their val- 
ues would meet and remain at said ratio is uncertain. 

It was stated, that because from 1792 to 1873, un- 
der the free coinage laws in the United States, said 
metals remained substantially equal in value at said 
ratio, that, therefore, they would again assume the 
same relation in value under like laws, and there re- 
main. But this conclusion is not justifiable, because 
the demonetization of silver in the United States by 
the law of 1873 was not the only cause that operated 
to make the values of gold and silver part company. 

The desire for both gold and silver for use as mon- 
ey, and in other ways, is world-wide; and therefore 
the demand of the world, and not of the United States 
alone, controls, in connection with the supply, the val- 
ue of silver; and, in fact, not only did the United 
States demonetize silver to a certain extent by the law 
of 1873, but between 1867, the time of the Paris con- 



156 



FUNCTIONS OF GOVERNMENT. 



ference and the present, several leading commercial 
nations of the world, other than the United States, de- 
monetized silver to a certain extent. So that in truth 
and fact the law of the United States of 1873 did not 
alone cause silver to decline and gold to increase in 
value. But certainly the change in their comparative 
values was caused, in part at least, by the demonetiz- 
ing laws of these commercial nations. 

For reasons assigned, in discussing the ratio fixed 
by the law of 1792, if the values of silver and gold 
should not again meet at the ratio of sixteen to one un- 
der a free coinage law, then the metal underestimated 
in value by the ratio would be driven out of circulation, 
and the one overestimated would be the sole circula- 
ting medium as money. It would be important wheth- 
er or not the money so circulated would be equal in 
value to its value in 1873; for if its value under such 
a new law would be less than its value was in 1873, 
then debts contracted before then and still unpaid, as 
in the case of some public debts, if not some others, 
would be payable in money of less value than the mon- 
ey received when the debt was contracted ; and to that 
extent, the charge of repudiation would be true. 

As to all debts contracted at any time since 1873 
and still unpaid, as to whether or not there would be 
substantial repudiation in any degree, would depend 



FREE COINAGE. 157 

upon whether or not the money in circulation would 
be of less value than was the money received at the 
time such debts were contracted. 

As gold has continually increased in value since 
1873, debts contracted of comparatively late years 
have been contracted upon the basis of a dear dollar, 
as compared with the dollar of 1873; and, therefore, 
under such a new law, there would be more danger of 
partial repudiation in case of debts recently contracted 
than in case of those of long standing. As to what 
would be the result, no one can foretell to a certainty. 

The Republican party, whose candidate for presi- 
dent, William McKinley, was successful at the last 
election, declared in its platform that the party was 
"opposed to the free coinage of silver except by inter- 
national agreement with the leading nations of the 
world," which it pledged itself to promote. And it 
further declared that "until such agreement can be ob- 
tained the existing gold standard must be maintained 
at parity with gold." 

Inasmuch as the United States is a debtor, and, 
generally speaking, its citizens, too, are debtors, and 
their creditors are, generally speaking, citizens of the 
other "leading nations" referred to in the Republican 
platform; and inasmuch as such citizens are no doubt 
influential in fixing the international agreements of 



158 FUNCTIONS OF GOVERNMENT. 

such nations, and their laws; and inasmuch as a free 
coinage law would be detrimental to the interest of 
such citizens, it may be concluded with reasonable cer- 
tainty that the Republican party will never be able to 
bring about any such international agreement, and, 
therefore, the success of the Republican party means a 
perpetuation of the single gold standard, which means 
a continuous extortion by the creditors of the debtors. 

At the last election, then, in deciding which candi- 
date to support, the voter had to decide between the 
perpetuation of a' system of extortion and robbery by 
those who had enjoyed the benefits of the system for 
over thirty years, and a system which might result in 
partial repudiation in some cases. The voters had to 
decide between two policies, both of which were 
wrong in principle; one of which would certainly per- 
petuate a wrong, and the other of which might result 
in wrong in some cases, but, if so, had in its favor the 
extenuating circumstance that the position of the par- 
ties to contracts would be changed, the creditor there- 
after suffer to the advantage of the debtor. 

Some advocated that what was just could sooner be 
obtained by perpetuating the evil as it then existed, 
and voted for the Republican candidate; and others 
thought that if the ratio of sixteen to one was not just 
that it constituted the quickest route to the desired end. 



FREE COINAGE, 159 

and that in any event retaliation was better than con- 
tinued extortion and robbery by the same class of the 
same class. 

The opposing parties having both been wrong in 
the last national campaign, what an excellent oppor- 
tunity now exists for a compromise upon exactly the 
right thing — that is, of course, upon the passage of a 
law providing for the free coinage of silver without 
attempting to establish any ratio of values by statu- 
tory law, the silver dollars to be the same as the old 
standard silver dollar. 

After such a law should go into operation, there 
would be in existence gold coins, as at present, and 
new silver coins like those now existing, but with their 
comparative values depending upon natural laws. The 
present law now provides for the free coinage of gold. 

Let us first consider such a law as affecting the 
future, that is, affecting contracts made after the pass- 
age of the law, and afterward its effect upon contracts 
existing at the time of its passage. Of necessity, upon 
the passage of such a law, silver would increase in value 
because of the additional use to which silver might be 
put thereafter, and gold would decrease in value be- 
cause of the lessened use of gold thereafter to the ex- 
tent that the use of silver would thereby be increased. 

With such a law in operation, in making a contract. 



160 FUNCTIONS OF GOVERNMENT. 

the parties thereto would generally expressly provide 
whether payment was to be made in gold or silver. 
The real values of each, gold and silver, would quickly 
become generally known. 

In selling an article, one might dedare that he 
would only sell it for so many dollars of gold; another 
that he would only accept in payment for it so many 
dollars in silver; or some person might propose to ac- 
cept in payment of an article offered for sale so many 
dollars in silver, or so many dollars in gold. 

If, under such a law, gold and silver should meet 
and sustain the relation toward each other in values of, 
for illustration, thirty-two to one, then the price of an 
article would be stated to be two in silver or one in gold, 
since in coins of gold and silver of present weight and 
fineness there is sixteen times as much silver in weight 
in a silver dollar as there is of gold in a gold dollar. If 
under such a law the real values of gold and silver 
should come to sustain the relation toward each other 
of sixteen to one, then, since coins are made of the size 
as above specified, the price of an article would be the 
same in terms of both coins, that is, for illustration, 
one dollar in gold or one dollar in silver. 

So in the making of a contract providing for the 
payment of money in the future, the contract might ex- 



FREE COINAGE. 161 

pressly provide for the payment of silver dollars or of 
gold dollars, as the parties might agree. 

Under such a law, where there would be no inter- 
ference with natural laws by statutory laws, experi- 
ence would soon teach which would be the more sta- 
tionary in value, gold or silver. If there should be any 
substantial difference in this respect, then the one most 
stationary in value would generally be used; but the 
parties would be at liberty to contract in terms of 
either. If there should be no substantial difference in 
the stability of the values of the two, then, no doubt, 
both would be used to a large extent; and if the con- 
tract did not express more specifically than simply in 
dollars in what payment should be made, then the 
party required to make payment under such a contract 
could pay either kind of dollars, as payment in either 
kind would fulfill the terms of the contract. 

Under such a law a legal tender act could as well 
be passed. A legal tender act is of no value in cases 
of payment on contracts that specifically provide in 
what payment is to be made. A legal tender act pro- 
vides in what payment is to be made when the con- 
tract does not by its terms provide. And in any case 
where a contract is not fulfilled and suit is brought 
and judgment is obtained, and in cases of suits to re- 
cover damages for breaches of contract or commis- 



162 FUNCTIONS OF GOVERNMENT. 

sions of torts, the law could provide that the verdict 
should express the kind of dollars, silver or gold, in 
which the verdict is rendered. If, then, under the 
judgment, property other than money were levied 
upon and sold to satisfy the judgment, at the sale bids 
should be made in the terms of the money specified in 
the verdict and judgment which follows the verdict. 

Under such a law, not only could either kind of 
money be used as the parties might agree — and would 
the one kind certainly be used to the greater extent 
which proved to be the better as a standard of value, 
as a medium of exchange and with which to pay debts 
— but any one could store either that he chose; which- 
ever he thought would be less apt to decrease in value 
while stored. 

As hereinbefore stated, all articles vary in value 
somewhat; there is no ideal standard, no ideal money. 
Experience has shown that gold and silver make better 
money than other things. If under natural laws either 
gold or silver in the future should prove unworthy for 
use as money, it would fall into disuse; and if any 
other article proved itself to be superior to either gold 
or silver, or both, then people should be free to use it 
as money. 

It will be admitted to be true, without argument, 
by those impartial in judgment, that it is safer to fol- 



FREE COINAGE. 163 

low natural laws than statutory laws that contravene 
natural laws; that the nearest approach to justice pos- 
sible on earth will most certainly be reached by com- 
pliance with natural laws, while a disregard of them 
will most certainly result in injustice. 

Nor do natural laws need the assistance of legisla- 
tive acts to aid them in their operation. They will 
most certainly operate with or without legislative act, 
and reward those with justice who regard them, and 
punish those who go counter to them. 

If natural laws regulate the comparative values of 
gold and silver, then the enforcement of legislative 
acts that attempt to enforce provisions relative to com- 
parative values differing from real values will result in 
evil as certainly as would the enforcement of a legisla- 
tive act requiring citizens to put their hands into fire, 
in which case, by a law of nature, the human tissue 
will thereby be destroyed, notwithstanding any legis- 
lative act relative thereto. 

Does not such free coinage as suggested leave the 
values of the articles to be used as money to be set- 
tled by natural laws, and leave people free to choose 
that which is best to be used as money? If so, it is the 
best possible human law. Any legislative act is futile 
that goes with natural law, and a positive evil that 
violates it. 



164 FUNCTIONS OF GOVERNMENT. 

Under such a law, it would be better if the coins 
of the different metals could be named differently, so 
that confusion might not arise. As neither of two in- 
dividuals both named John are specified by calling 
John, but to be distinguishable by name, must each 
have added to his name other and different names, as 
John Henry and John James, so with a certain num- 
ber of grains of gold called a dollar, and a certain num- 
ber of grains of silver also called a dollar; neither are 
named, but to be named, other distinguishing names 
must be added, such as silver in the one case and gold 
in the other, making the complete names — gold dollars 
and silver dollars. But no principle is involved in the 
matter of names, and, therefore, rights are not in- 
volved, but only the matter of convenience. 

It will be remembered that the volume is a very im- 
portant matter in connection with the subject of mon- 
ey, and it will be seen at once, upon reflection, that 
under such a free coinage law, as above suggested, 
there is the least possible danger of an insuffiency oc- 
curring. . . 

Of course, if money were left wholly free to evolve 
naturally; if there were no law upon the subject; if 
individuals were free to coin anything for which there 
was a demand as money, then there would still be less 
danger of an insufiSciency occurring. But that is only 
a desideratum. 



FREE COINAGE. 165 

Under the law as at present existing, permitting 
only the coinage of gold dollars, or under the law of 
free coinage at the ratio of sixteen to one, as advocated 
by some, where the real values might not correspond 
with those fixed by statutory law, and where, therefore, 
as hereinbefore shown, the money underestimated in 
value by the ratio would be driven out of circulation as 
money, there certainly would be more danger of an 
insufficiency of volume than in the case of the free 
coinage of both without a ratio, where neither would 
be driven out of use unless one metal proved itself to 
be better money than the other by reason of greater 
stability of value, or of some other superior quality ; in 
which case the poorer money would be driven out of 
use, or in all probability the poorer money could not 
be driven wholly out of use if there was an insufficient 
volume of the better money; but the poorer money 
would be continued in use as money to the extent that 
the better money was insufficient. 

Under such a law, as in all cases where no statu- 
tory law interferes with natural laws, the supply 
would always about equal the demand, never much ex- 
ceed it, never much fall short of it; because if at any 
time the demand should exceed the supply, the article 
would rise in value, and there would then be more 
profit in the production of the article. To realize the 



166 FUNCTIONS OF GOVERNMENT. 

additional profit increased production would follow, 
until the demand was fully supplied, and there were 
no unusual profits; then production would be lessened 
until demand would again call for it in offering an in- 
creased profit therefor. 

What causes hard times and financial panics? If 
they are caused in any degree by evils of a monetary 
system, whether by a fluctuating standard or an in- 
sufficient volume of money, the danger thereof would 
certainly be reduced to the lowest degree under a law 
as suggested herein, if natural laws are more reliable 
than legislative acts that contravene them; and in all 
probability, under such a law as herein proposed, a 
financial panic would never again occur. 

But this subject of the volume of money should not 
be passed over without calling the attention of the 
reader to the connection between the money question 
and the land question, as discussed in Chapter YI. 
Even with the free coinage of gold and silver without 
a ratio fixed by statute, does it not occur to the reader 
that under laws as they exist today relative to the 
terms upon which individuals are allowed to possess 
exclusively parcels of land, that a combination of the 
owners of land containing gold and silver might be 
made whereby the volume of money might be con- 
trolled, and equity of contracts destroyed, and every 



FREE COINAGE. 167 

evil result that would result from a fluctuating stand- 
ard or an Insufficient volume of money? 

The number of parcels of land within the United 
States, and within the world, that contain either gold 
or silver, are exceedingly few as compared with all 
the land of the earth. What is there to prevent the 
few who control the debts of the world to acquire, in 
the interests of the creditors, the ownership of the 
lands containing gold or silver and then control the 
amount of the product therefrom? If these few be suf- 
ficiently influential to direct the legislation of the lead- 
ing commercial nations of the world on the money sub- 
ject in their interests, as we believe they did following 
the Paris conference in 1867, even if they do not ac- 
quire ownership of gold and silver mines, may they not 
influence the owners to manipulate them in the inter- 
ests of those controlling billions of the world's debts? 
If those debts can be doubled or trebled or increased 
in amount substantially by limiting the output of the 
mines, might not the benefits thereby to accrue to 
them as creditors, as did benefits accrue to creditors by 
the law of 1873 demonetizing silver, exceed the bene- 
fits that might otherwise accrue as profits in operating 
the mines, especially as neither gold nor silver, being 
elements of nature, would decay, but could be mined 
at any time thereafter; and, if so, is* there not danger 



168 FUNCTIONS OF GOVERNMENT. 

of such manipulation under a system of liolding land 
that imposes no terms as conditions at all commen- 
surate with the advantage accruing from the privilege 
of holding it? 

Perhaps such combinations have heretofore limited 
the output of gold mines, thereby affecting the values 
of all other articles, in terms of gold, used as money. 
Who can say such has not been the case? It has been 
reported that similar combinations have affected the 
output and value of the product of other mines and 
wells, as those of coal and oil. The possibility thereof 
arises — with no improbability of realization — from the 
fact that the number of places of the supply of gold 
and silver are comparatively few, together with the in- 
sufficient amount of taxation imposed upon real estate 
values. 

But with taxation imposed upon principles an- 
nounced in Chapter YI, the tax upon the mine would 
be the same whether operated or not; and no doubt 
the advantage that might accrue from holding a mine 
and not operating it would not exceed, if it equaled, 
the amount of the taxes; therefore, no inducement to 
limit the natural output of the mine would exist, and 
no interference therewith would be attempted. But, 
later, references will again be made to the relation and 
comparative importance of the subjects treated herein. 



FREE COINAGE. 169 

A law such as we have been discussing, one provid- 
ing for the free coinage of both gold and silver, with- 
out providing a ratio, might be passed, and specifically 
limited in its operation to time subsequent to its pas- 
sage, having no effect upon pre-existing contracts or 
money except such as would necessarily result from a 
fall in the value of gold, consequent upon an antici- 
pated lessened use of gold in the future. 

By such a provision all silver dollars extant at the 
time of the passage of the law would still be legal ten- 
der for prior debts, the same as though no change in 
coinage were made. As to past contracts, everything 
would continue as before, but the new silver dollar 
would not be legal tender in paj^ment of obligations 
bearing date prior to the enactment of the law in ques- 
tion. 

But would any injustice result if the law now being 
considered should provide that silver dollars coined 
under the new act should be legal tender in the pay- 
ment of all prior obligations except where payment in 
gold is specifically provided, that is, be legal tender 
in all cases where prior silver dollars would be legal 
tender? 

In seeking an answer to this question it is material 
to consider the facts, that somewhat on account of and 
since the passage of the act of 1873, demonetizing 



170 FUNCTIONS OF GOVERNMENT, 

silver, gold has almost, if not quite, continuously in- 
creased in value; and that on account of the passage 
of the new act proposed, gold would somewhat de- 
crease in value and silver somewhat increase in value. 
Of course, if under such a law silver should rise in 
value so that one dollar in silver would be equal in 
value to one dollar in gold, as the gold dollar was of 
value in 1873, then all debts contracted on or 
before that date, as in the case of some of our 
national debts, and perhaps in some other cases, could 
be paid with our new silver dollars without injustice. 

And as to any debt contracted since then, if under 
our new law silver should rise in value, so that one dol- 
lar in silver would be equal in value to one dollar in 
gold, as the gold dollar was of value when the debt 
was contracted, then no injustice would result from 
the payment of that debt with the new silver dollar. 

It is certain that under a law such as is now being 
considered, silver would rise in value as much and gold 
decline in value as much as they would do under a free 
coinage law which attempted to fix a ratio — no more, 
no less; since, as hereinbefore shown, it would be the 
natural laws of supply and demand in each case that 
would fix the values of both gold and silver. But, as 
formerly stated, it is impossible to determine to a cer- 
tainty what the values of gold and silver would be un- 



FREB COINAGB. 171 

der such laws. We know the comparative values of 
gold and silver would change, but just how much can- 
not be foretold. 

It would be just to pay in new silver dollars those 
debts contracted at a time when the value of the gold 
dollar at the time did not exceed the value of the new 
silver dollar at the time of payment; and unjust to the 
creditor to pay with the new dollar in those cases 
where the debt was contracted at a time when the 
value of the gold dollar at the time of the contraction 
of the debt exceeded the value of the new silver dol- 
lar at the time of payment. These results would be 
more likely to occur in the cases of those debts con- 
tracted recently, comparatively, since in recent years 
gold has been very valuable compared with its value in 
the year 1873 and in the few years immediately suc- 
ceeding. 

Because gold has, generally speaking, continually 
risen in value since 1873, and because of existing con- 
tracts, there are those of date of each year, if not of 
each month, since the passage of the law of 1873, and 
because the exact effect upon the values of gold and 
silver of such a law as now being discussed, cannot ex- 
actly be foretold, it cannot be said to what extent, if 
any, injustice would result from the passage of such a 
law. But bear in mind that injustice would result to 



172 FUNCTIONS 0F_ GOVERNMENT. 

the debtor if he be required to pay in money that has 
increased in value since the debt was contracted, as 
g«>Id has certainly increased in value; therefore debts 
might be paid in new silver dollars under the law, not 
equal in value to the gold dollar just before the pas- 
sage of the law, and no injustice result therefrom. 

It seems absolutely certain, in view of the complex 
condition of things, that in no event can there be an 
adjustment of all existing contracts in such a way that 
no harm will result. Debtors since 1873 of executed 
contracts have suffered injustice that cannot now be 
remedied. As to parties to existing contracts, and as 
to parties to all future contracts, if there be no change 
in policy, the debtors thereto will certainly suffer from 
a rising standard, and with a change of the nature now 
being discussed, that is, a change providing for free 
coinage without a ratio and making silver dollars 
coined under the act legal tender equally with existing 
silver dollars in the cases of contracts existing at the 
time of the passage of the new law, injustice may re- 
sult to some creditors. 

Under the circumstances, it is diflflcult to advise as 
to the course to be taken. The difficulty is the fruit 
of the vicious legislation of 1873, brought about, no 
doubt, through the influence of the world's creditors 
of that period. If they only were to be affected, the 



FREE COINAGE. 173 

course to pursue could be easily decided upon, but 
later, and especially small creditors are as virtuous as 
debtors and their rights as sacred. 

The solution of the question whether or not silver 
money issued under a free coinage act vrithout a ratio 
should be made a legal tender in payments of debts 
antedating the passage of such a free coinage law must 
be settled by the conscience largely; advice in the mat- 
ter would be somewhat impertinent; but as to a free 
coinage act in its application to contracts to be made 
after the passage of the law, there reason dictates the 
conclusions, and because of a feeling of certainty of be- 
ing in the right, advice has been freely volunteered. 



CHAPTER XIV. 
TAXATION. ' 

In the exercise of its functions to maintain in socie- 
ty the natural equality of the rights of men, the gov- 
ernment necessarily incurs expenses; and the function 
of collecting taxes to defray such expenses necessarily 
arises as incidental to the performance of its other 
functions. 

Of course, in the collection of taxes, the ever guid- 
ing principle of maintaining the rights of men equal 
must be scrupulously adhered to. An injustice m i- st not 
be committed in one respect that justice may prevail 
in another. Naturally enough, as we discovered the 
necessity for the exercise of one of the functions here- 
inbefore specified, we at the same time discovered that 
the very exercise of that function produced a fund for 
the government (Chapter YI). 

Some have contended, and perhaps shown satisfac- 
torily, that said fund will exactly defray the expenses 
of government in economically administering all of its 
proper functions and none others; but in a recent 
book on "Natural Taxation,'^ by Thomas G. Shearman, 
it is contended, with apparent success, that all of the 



TAXATION. 175 

expenses of the national, state, county, municipal, and 
township governments, as at present administered, do 
not equal the amount of said fund. 

However that. may be, certain it is that that fund 
must first be used to defray the government expenses 
before any other values are collected for the purpose, 
because the government owns the fund — the existence 
of the fund being necessarily incident to the existence 
of society maintained upon equitable principles. The 
government must as certainly use this fund of its own 
in the first instance, and before requiring any of its 
citizens to contribute of the fruits of their laboFS with 
which to defray its expenses incurred in operating the 
government, as it is certain that an individual in per- 
forming his personal duties should support himself 
with his own funds rather than with money begged of 
friends. 

For a government not to collect this fund to be used 
for the purpose indicated, but instead to allow others 
to appropriate it, might be likened to an individual 
failing to collect wages due him, and thereby being 
compelled to beg of others means for his support. 

If the argument of Chapter VI be unanswerable, 
if it be admitted that the government should do as 
therein contended, then it is self-evident that the fund 
derived from the performance of that duty must first 
be used by the government in its outlays. 



176 FUNCTIONS OF GOVERNMENT. 

For identification, it may be well to state that that 
fund is exactly the same fund, created in the same way 
and for the same purpose, as the fund advocated by 
those now generally known as the "Single Taxers." 
Those who advocate this system of taxation are called 
"Single Taxers" because generally they believe that 
the fund thus secured will suffice to defray the govern- 
ment expenses incurred in doing those things, and only 
those things, which it ought to do, and that no other 
tax will be necessary, and that if the government will 
collect this fund that belongs to it, it will not be neces- 
sary for it to discourage industry in any degree by im- 
posing a penalty in the form of any tax upon industry, 
upon those who work, economize, and thrive. 

Let it be restated in this connection that the tax ad- 
vocated in Chapter YI imposes no burden upon in- 
dustry, takes nothing created by labor, but, instead, 
that value of land created by the increase of popula- 
tion, by no one alone, but by the fact of the existence 
of all together. It is, therefore, the fund of all, and 
by taxing it the rights of all remain equal. If the gov- 
ernment does not take it, some individuals will; and 
those who take it gain advantages over others, thereby 
destroying equality of rights. 

Inasmuch, however, as all may not be certain at 
present that that fund would be sufficient to defray all 



TAXATION. 177 

of the expenses of the government at all times and un- 
der all circumstances, it is well to consider further 
how to create justly an additional fund in case neces- 
sity should ever demand it. 

Supposing the rights of individuals in society to 
have been maintained equal up to this point, and sup- 
posing no incapable ones in society, exact justice de- 
mands that at least the first additional tax be a per 
capita one, each and all contributing equally to it. Why 
is this so? The statement is based upon the supposition 
that the rights of the citizens have been kept equal; 
that no one has gained any undue advantage over an- 
other; that no system has prevailed whereby one 
could appropriate and enjoy that which belongs even 
in part to any one else; that whoever, for superior con- 
siderations, has been secured by the government in the 
possession of a monopoly, whether it be a certain par- 
cel of land, a street railway franchise, or what not, 
that the government has not permitted the possessor 
to gain any advantage over others; but, instead, has 
either taken to itself, for the benefit of all, the neces- 
sary advantages incident thereto, as in the case where 
permanent possession of land has been secured, or else 
has so controlled the operation of the business consti- 
tuting the monoply that those operating the same 
gained no undue advantage, as in the case of street 



178 FUNCTIONS OF GOVERNMENT, 

railways. Supposing these things to be true, then 
every one has received equal benefits by the existence 
of government; and if any one has a greater accumu- 
lation of wealth than any one else, it must be due to 
his superior ability, industry, or economy, and he is 
entitled to it. The security in the enjoyment of it con- 
stitutes the stimulus that ever excites to greater indus- 
try and economy, and makes progress and civilization 
possible and life worth living. 

But in certain respects the conditions are other- 
wise than as supposed. There are in every society the 
incapable, the young, the aged, and the sick. Besides 
these there are those who will not work, those who 
commit crimes and must be punished by government, 
and thus become a source of expense rather than of 
revenue. 

Of those not young, not aged, not sick, and not 
criminal, there are all grades of abilities, from those 
able to chop three cords of wood per day to those 
barely able to chop enough to keep warm; from those 
barely able to support themselves to those able to pro- 
duce a large surplus over their private wants. 

It might be shown, but is here assumed, that to 
maintain the rights of the efficient members of society 
equal, the government must, as one of its functions, 
punish the criminal and support the young, aged, and 



TAXATION. 179 

sick, not voluntarily cared for by relatives or friends. 
But whether said assumption is justifiable or not, 
of necessity those classes, including those barely able 
to support themselves, must be excluded from a per 
capita tax, but a per capita tax upon all others, to 
be equal and just, must of necessity be small, that it 
may be collected of that element of any society able 
to pay something, but unable to pay much. 

The "single tax" then, comes first; and if the fund 
thus created be insufficient, then the per capita tax, 
levied as above indicated, comes second. 

But suppose, again, as some may think possible, 
that the "single tax" and the per capita tax together 
may not furnish sufficient revenue, then what next? 
As in the case of a per capita tax, from its operation, 
there must be omitted certain classes, so in any fur- 
ther tax, for the same reason, there must be omitted 
the same classes, and in addition thereto, that class 
that is able to pay a small per capita tax, but no 
other. 

The class in every society able to pay a tax, yet 
unable to pay much, by reason of which any per cap- 
ita tax should be made small, as above specified, in- 
cludes those people who support themselves, but are 
unable to accumulate any considerable property. Of 
necessity, then, any further feasible tax must affect 



180 FUNCTIONS OF GOVERNMENT. 

those with accumulated property; but there are all 
grades of those, with property ranging from those 
with barely anything to those with more than a com- 
petence. As the term land, used in Chapter YI, in- 
cluded no improvements thereon, the term property 
as here used includes all species of wealth, that is, 
all articles of man's desires that can be obtained only 
by man's labor, whether. of buildings or other things 
usually classed as part of real estate or not. But jus- 
tice demands that the tax be equal; and in order to 
be equal all those with any considerable accumulated 
property must be included and taxed equally; and 
this is so because if all property were taxed, that is, 
if every person were taxed in proportion to the 
amount of his wealth, then as taxes are collected to 
defray expenses of government incurred in perform- 
ing functions, the benefits of which inure equally to 
all, the wealth of some would be taken to be used for 
the partial benefit of others. 

It has been urged that a personal property tax, so- 
called, should be levied upon individuals in proportion 
to the values of personal property possessed by them 
upon the assigned reason that the owners of personal 
property receive benefits from the government in pro- 
portion to the values of their personal property; and 
in that, as they say, the more personal property a per- 



TAXATION. 181 

son owns, the more it costs the government to pro- 
tect it. 

We have hereinbefore assumed it to be a function 
of government to administer justice, but in what does 
this consist? All offenses consist in commission of 
torts or in the violation of contracts, and the govern- 
ment administers justice by restraining offenses or by 
exacting commensurate damages in cases of commis- 
sion of offenses. 

In case a person commits a tort by injuring the 
person or property of another, it costs the govern- 
ment the same to administer justice in the case, re- 
gardless of the amount of personal property that the 
person may own who has been injured by the tort. 

In case one party to a contract breaks it, it costs 
the government the same to administer justice in that 
case, regardless of the amount of personal property 
that the person may own who invokes the aid of the 
government in the matter. 

While a person with much personal property may 
make more contracts than one with less, and there- 
fore more contracts to which he is a party may be 
broken than to which others, with less property, are 
parties, and therefore those with much personal prop- 
erty may invoke the aid of government oftener than 
others, still the additional expense to which the gov- 



182 FUNCTIONS OF GOVERNMENT. 

ernment is subjected is really caused by the fault of 
others, for which those who may have made the con- 
tracts with them are not to blame; therefore in jus- 
tice they should pay no more taxes to support the gov- 
ernment than as though they had not been the inci- 
dental cause of the additional expense. 

A tax upon individuals, then, in proportion to the 
value of their personal property, is socialistic in char- 
acter- -it smacks of community of goods; it violates the 
principle that the fact that people differ in abilities is not 
a cause of complaint between man and man. Such a 
tax destroys the equality of the rights of men instead 
of maintaining them, and cannot be justified. 

If a tax in proportion to amount of wealth pos- 
sessed is popular, it is so by reason of a consciousness 
that many of those who now possess much wealth 
have obtained it, not by labor alone, but by reason of 
undue advantages either conferred or permitted by 
government; and where such is the case, which is 
somewhat true as governments are now conducted, a 
tax upon individuals in proportion to the amount of 
their wealth would possess the virtue of being one act 
of injustice that might somewhat offset others that 
have caused such differences in amounts of the wealth 
of different individuals. 



TAXATION. 183 

But effort is made here to discover a just tax un- 
der a system of government that does not permit, 
much less create, injustice in other respects. In 
adopting this tax some arbitrary rule would have to 
be established. For illustration, all those with five 
hundred dollars' worth of accumulated property 
should be taxed. This would substantially include all 
others than those able to pay a per capita tax and no 
more. 

Let it be understood that this does not contemplate 
taxing those with more than five hundred dollars' 
worth any more than those with just five hundred dol- 
lars' worth; it contemplates taxing all equally that 
own at least five hundred dollars' worth of accumu- 
lated property. If after this tax was added to the 
single tax and to the per capita tax, still more was 
needed, then another tax should be levied equally 
upon all those owning some other and larger amount 
of property; say, for illustration, one thousand dollars, 
and so on, as necessity demanded, there being no limit 
to the extension of the principle except the total 
wealth and resources within the government. 

Only one other source of revenue is subject to the 
government call and that is the services, even to the 
extent of the lives of its citizens. In taxing the serv- 
ices and lives of its citizens, a government must, of 



184 FUNCTIONS OF GOVERNMENT. 

course, still be just, and the persons taken must, if all 
are not taken, either be volunteers or taken by lot; 
in either case the government must, from its funds de- 
rived as above prescribed, compensate those in its 
service or the natural dependents of those whose lives 
may be taken. 

If the foregoing system be equal and just, as it ap- 
pears to be, and is wholly exhaustive in its ultimate 
considerations, are not all other systems inferentially 
unequal and unjust? It is certainly improbable that 
two or more systems are equally equitable and just. 
But perhaps the justice of the foregoing system may 
become more apparent by contrasting it with other 
known systems. 

The government of the United States and of the 
respective states constituting the Union, have separate 
and distinct functions to perform. Each government 
collects its own taxes with which to defray its own ex- 
penses incurred in performing its functions. The fed- 
eral government follows an entirely different system 
of taxation than do the state governments ; but if there 
be one just system that would furnish suflQcient reve- 
nue, certainly both the national and state governments 
should follow it. From the fact that the national and 
state governments collect taxes under different sys- 
tems, it may be concluded, with reasonable certainty 



TAXATION. 185 

at least, that the national government or the others 
are wrong. A brief examination of their present sys- 
tems will show them both to be wrong. 

The state governments do levy some taxes upon 
land values, but not in a degree at all commensurate 
with the advantages accruing to land-owners by rea- 
son of being secured in an exclusive possession of their 
land, as somewhat elaborated in Chapter VI. To a 
certainty, then, the state governments allow some of 
its citizens to appropriate to themselves a value that 
really belongs to all of its citizens, that is, to the gov- 
ernment; as a result inequalities arise, and as a result, 
also, the governments have to tax industries to raise 
the deficiency. The chief method of raising the defi- 
ciency is by taxing individuals in proportion to their 
wealth, a system hereinbefore condemned. 

If it were true, as a general rule, that the people of 
the state possess wealth in quantities proportionate to 
the undue advantages that the governments permit 
some to enjoy, then one evil might somewhat offset the 
other. But rather than take the risk that one evil will 
offset another, would it not be better neither to commit 
nor permit any evil? Would it not be better to tax 
people in proportion to advantages received that are 
necessarily incident to the formation of society than in 
proportion to their abilities, industry, or economy? 



186 FUNCTIONS OF GOVERNMENT. 

Yes, is the only impartial answer. To those, at Teast, 
who fully understand the principles of Chapter YI 
no further argument is necessary to convince them of 
the injustice of the present system. 

But the system of raising taxes by the states has 
one general characteristic in its favor, as compared 
with the national system. The state system constitutes 
direct taxation, and under it the citizen knows when 
he pays his tax and how much he pays, while under 
the national system taxes are raised indirectly and no 
citizen knows how much tax he pays nor when he 
pays it. 

Some historian has said that the indirect system 
of taxation was invented by an absolute monarch as a 
means by which he could procure of his subjects the ' 
greatest amount of money with the fewest complaints. 

The system has no place in a government of the 
people, for the people, and by the people. No writer of 
prominence has ever advocated it as a just system of 
taxation. It certainly does not maintain the equality 
of the rights of men, but rather destroys it. 

Nearly all the national revenues are obtained by 
requiring the producers of certain specified articles 
within our government to pay to the government a cer- 
tain amount before disposing of or consuming them, 
and by requiring whoever, citizen or foreigner, brings 



TAXATION. 187 

into this country from elsewhere certain specified ar- 
ticles, to pay to the United States government a cer- 
tain amount upon the bringing in of the article. Just 
how does the system work ? Among the articles taxed 
upon production in this country are spiritous liquors. 
Upon production of the same the producer pays to the 
government the amount required by law, and he then, 
of course, in selling the product receives the cost of 
production, the amount of tax paid to the government 
and a per cent of profit on the whole thereof. There- 
fore it is, that in the end it is the one who consumes 
the article that in reality, indirectly, pays the tax. 
Among the articles taxed upon being brought into this 
country from elsewhere is soap. Upon the bringing in 
of soap, the person who brings it pays to the govern- 
ment the amount required; he then in selling the 
soap, receives the cost of it, also the tax paid to the 
government, and a per cent of profit on the whole. 
The one who consumes the soap indirectly pays the 
tax. WhRt an equitable system! The people of the 
United States contributing to pay the war debt, to pay 
pensions, to educate the Indians, to fortify our coasts, 
to float our navy, to pay the salary of our president, 
in proportion as they use soap, as they wash, as they 
are godly. 

Realize this in all of its fullness. Not one cent of 
its tax is raised by the method indicated to be just; 



188 FUNCTIONS OF GOVERNMENT. 

not one cent upon land values; not one cent per cap- 
ita; not one cent by a personal property tax. Whether 
the land grows fine timber, or produces fine farm 
products, or is located in the centers of large cities and 
is worth hundreds of dollars per square foot to the pos- 
sessor, or whether the land is underlaid with coal or 
iron, silver or gold, or whether there bursts forth from 
the surface inflammable oils or gases, the United 
States lays not one cent of tax upon its values. No 
multi-millionaire, under its system, no monopolist of 
the United States is under any obligation to pay any 
more than the poorest citizen. If they use less soap, if 
they have fewer children, — and multi-millionaires have 
few and monopolies none, — they pay less tax. For 
whatever use imported articles may be intended, 
whether to be used in the arts, sciences, manufactures, 
to be eaten, worn, or taken as medicine, if they be with- 
in the schedule, whoever uses them must pay this great 
government for the privilege. Under this system the 
tax is paid by the people in proportion to their use of 
certain articles, in proportion as they eat, in propor- 
tion as they wear clothes, or in proportion as they take 
medicine. Those who neither eat nor wear any of them 
and are fortunate enough to remain well, and require 
none of them as medicine, pay no taxes to the United 
States government. The iniquity of the system that 



TAXATION. 189 

enables governments to obtain the greatest amount of 
taxes with the fewest complaints, is one of the princi- 
pal causes that have perpetuated the system which 
even now is engrafted upon a self-governing people. 

There is another cause, also, for its perpetuation, 
equally as potent and iniquitous. It is this: Under 
the guise of levying a tax for the government, laws are 
enacted designed to give, and they actually do give, 
when executed, special advantages to some to the det- 
riment of others, reference being made to what is 
known as a protective tariff. 

As hereinbefore shown, whenever a tax is paid to 
the government upon the bringing into this country of 
an article, the price thereof to the people of this conn- 
try is increased to the extent of the amount of the tax, 
and a percentage of profit on the amount of the tax, 
in which case the producer in this country of compet- 
ing articles is benefited, and in this way: 

Suppose the article imported is soap, and the tax 
is ten cents per cake of a certain size and kind; then 
by reason of the tax the price of the soap is increased 
at least ten cents a cake, by reason whereof whoever 
produces a competitive article in this country can in- 
crease the price of his at least nine cents per cake with- 
out fear of competition with the imported article. In 
practice oftentimes a very high tax is imposed upon an 



190 FUNCTIONS OF GOVFRNMBNT. 

imported article, not for tlie purpose of obtaining any 
revenue for the government, but for the very purpose 
of excluding its importation that the home producer 
may have no competition from outside sources, that he 
may, for that reason, charge home consumers of his 
article higher prices. 

A great national political party, and the one suc- 
cessful at the polls in the recent election, the Repub- 
lican party, openly advocates not only the perpetuation 
of that policy but an extension of the principles in- 
volved in it; and the president-elect is the undisputed 
champion of that doctrine. The other great national 
party, the Democratic party, while not advocating a 
tariff sufficiently high to exclude importation and 
thereby prevent competition, nevertheless does advo- 
cate a tariff for revenue only. But any tariff upon 
an article produced in this country is necessarily, in- 
cidentally, protective in its character. But the pol- 
icy of the Democratic party constitutes the lesser of 
the two evils, for tariff for revenue only tends to- 
wards free trade, free trade towards direct taxation — 
direct taxation must be upon real estate values or per- 
sonal property. When the time arrives to choose be- 
tween the two, if the voter is still a free agent, with 
only a grain of sense left, no error will be committed, 
but taxes will be finally levied upon the land values 
where they naturally and justly belong. 



TAXATION. 191 

But specious arguments are made to convince the 
unwary that the protective tariff policy is a just one, 
and the fallacy of some of their stock arguments must 
be exposed. 

To our people, as laborers, it is said that the wages 
in countries other than our own are lower than in our 
country, and that, therefore, articles can be produced 
in other countries cheaper than here, and that home 
producers cannot compete with foreign producers and 
continue to pay higher rates of wages as they do 
now. It is further said that should the protective tariff 
tax be repealed, home wages must be reduced to en- 
able home producers to compete with foreign produc- 
ers. 

To our people, as consumers, it is said that the tax 
does not increase the selling price to us of articles in- 
cluded in the tariff; that the foreigner pays the tax; 
that with a tariff, home producers will sell to us 
cheaper than would either foreign or home producers 
were there no protective tariff tax. 

Should a person compare his notes of the argument 
as laborer with his notes of the argument as a con- 
sumer, he would, if at all discerning, at once see that 
certainly both of the claims could not be true, because 
inconsistent; he would see that if with the tax the 
home producer sold the product cheaper than he could 



192 FUNCTIONS OF GOVERNMENT. 

sell it without the tax, for that reason he could not 
pay higher wages with the tax than without it. 

If both claims be false, if in truth the rate of wages 
is not permanently affected by a protective tariff tax, 
neither made higher nor lower, but at the most only 
made to fluctuate as the law is changed; and if in truth 
a protective tariff tax does not lessen the cost of arti- 
cles to the consumer, but, on the contrary, increases 
the cost of them to the consumer, then any one with a 
knowledge of the motives of men that influence their 
votes, must admit that when the truth as above sup- 
posed becomes generally known, the protective tariff 
policy must cease to flourish. Let us then examine 
what the truth is in the matters under consideration; 
first, as to the effect of a protective tariff tax upon the 
rate of wages. 

The first logical inquiry upon this subject is, wheth- 
er or not there is a natural law of wages, that is, a gen- 
eral principle that regulates and controls them. For if 
so, we know, for reasons hereinbefore assigned in con- 
sidering other subjects, that in the long run, the natu- 
ral law, the principle, the truth, will control, and that 
any statutory law intended to interfere will, be futile 
for good, but will produce evil instead. 

By a law of human nature, under free conditions, 
individuals will work directly for themselves and not 



TAXATION. 193 

for others for wages, unless the wages offered are in 
excess of what they can make working for themselves. 
This statement involves the idea that individuals have 
opportunities to work for themselves. In what does 
an opportunity to work for one's self consist? It con- 
sists in access to land, including the privilege of ap- 
plying labor thereto. No wealth can be produced ex- 
cept by the application of labor to land, land in this 
sense, meaning the earth. At any time, then, the more 
free land there is, and the better the land that is free, 
the more and the better are the opportunities for one 
to work for himself, that is, the more he will be at 
work for himself, and the more wealth will he create 
for himself working for himself, and therefore the 
higher must be the wages offered him to procure him 
to work for another. Of the free land, in working for 
themselves people will work the best, that is, that 
which will yield the most wealth by the application of 
a certain amount of labor; therefore, in a country 
where there is any free land the rate of wages of un- 
skilled workmen working for others, will be an amount 
a little in excess of what they could produce working 
for themselves upon the best free land accessible to 
them. 

It is true that in this country, from the organiza- 
tion of our government to the present, the rate of 



194 



FUNCTIONS OF GOVERNMENT. 



wages of unskilled workmen has been somewhat high- 
er, generally speaking, than the rate in older countries; 
but it is also true that, during the same period, there 
has been more and better substantially free land than 
in the older countries where the rate of wages has been 
lower; and the fact that our rate of wages has been 
higher, as stated, must have been due to the fact that 
more and better opportunities for men to work for 
themselves have existed, owing to the existence of 
more and better free land. 

In this country, until within comparatively recent 
years, there has at all times been plenty of good sub- 
stantially free land for all who desired it ; but the 
time came when such lands were substantially ex- 
hausted and comparatively none such are now acces- 
sible. While the government books at Washington 
show large tracts of land for sale at nominal prices, 
the title to which is in the government, still such lands 
lie in regions embracing the Rocky Mountains and oth- 
er worthless tracts. 

The army of tramps has been created, social prob- 
lems have come into prominence and become political 
questions since free land became scarce and insuffi- 
cient to supply the demand therefor. If ever relation 
from cause to effect was clear and certain, it is so in 
this case. Social troubles exist in this country as a re- 
sult of the exhaustion of our free land. 



TAXATION, 195 

So while there was an ample supply of free land, 
what mattered it, so far as the rate of wages was con- 
cerned, whether or not there was a high protective 
tariff or free trade; for during that period one could not 
be induced to work for another unless he was offered 
more money than he could make working for himself 
upon the best land open to him, and during the whole 
period he would consent to work for others if only a 
little more were offered him. If the rule of selfishness 
be not denied as a controlling motive in actuating men, 
then it will not be denied that during the same period, 
as a rule, no more was offered men as wages for their 
services than was necessary to procure their services, 
whether there was a high protective tariff or free 
trade. 

Because the just rule of taxation has never been ob- 
served in this country, because people have been al- 
lowed to procure land of the government in unlimited 
areas, regardless of their needs or desires for actual 
use, upon terms not at all commensurate with the ad- 
vantages accruing therefrom to the holders of such 
lands, immense areas of land have been obtained 
from the government and held, and are still held, for 
the sole purpose of speculating in the rise of the values 
of such lands, which rise of value is always as sure to 
come as it is sure that population will continue to in- 



196 



FUNCTIONS OF GOVERNMENT. 



crease, because increase of population increases land 
values, as shown in Chapter YI. As a result, then, of 
the system that has been in vogue, the good land of 
the United States has been monopolized much sooner 
than it would have been under a just system; as a re- 
sult, the rate of wages for unskilled labor in this coun- 
try has been driven down much earlier than the boun- 
ties of nature would have required. 

Although the good land has already been appropri- 
ated and substantial prices are now asked for it, in- 
stead of mere nominal prices, as was the case when in 
the ownership of the government, still lands of equal 
quality are yet less in value in this than in older coun- 
tries, because population is less dense here; and land 
here is less valuable now than it will be in the future 
when the population is more dense ; and because land 
here is cheaper than in older countries, it is more ac- 
cessible by comparison than lands of older countries, 
and as a result wages are still somewhat higher here 
than in older countries. 

But to those who understand the principles of 
Chapter YI, it must be apparent that the rate of 
wages depends not upon a high protective tariff, nor 
upon a condition of free trade, but, instead, upon the 
value of land. For this reason those who desire an in- 
crease in the rate of wages should not vote for any pro- 



TAXATION. 197 

tective tariff tax whatever, but, instead, for whatever 
tends toward free trade; for whenever the tax upon 
the importation of goods into this country is abolished, 
as well as all taxes upon the consumer of goods, as 
consumer, then the period of direct taxation upon val- 
ues will arrive. Then when but two methods remain 
to choose from, when it remains only to decide whether 
land values, not the product of labor, but the result of 
the increase of population, or personal property, the 
product of labor shall be taxed, the decision will be 
in the right; and thereafter it will become unprofita- 
ble to hold more land than can profitably be used by 
the holder. As a result millions of acres of good land 
in this country will revert to the government and be- 
come open to use by those who need it, upon just terms. 
Then, and not until then, will the army of the unem- 
ployed vanish, and the rate of wages permanently rise 
to the point where natural laws will justly fix it. 

An examination of the other claim of the protec- 
tionists will prove it to be equally as untenable as the 
first claim. The reasons assigned for the claim, that 
under a protective tariff law the selling price to the 
consumer of protected articles will be less than other- 
wise are; that without such protection as such law 
affords them, home producers cannot compete with for- 
eign producers; that without such competition all of 



198 FUNCTIONS OF GOVERNMENT. 

the producers in the rest of the world of the articles 
in question, combine, form trusts, agree not to under- 
sell each other and arbitrarily hold up the selling 
prices to our consumers to a point above what it would 
be under a natural state of competition. And the fur- 
ther claim is, that with such protection as such a law 
affords them, that is, without foreign competition, the 
home producers will compete with each other and 
drive the selling price to our consumers down below 
what it otherwise would be. 

Assuming it to be true, for the purpose of this ar- 
gument, that foreigners can produce the articles in 
question cheaper than our own citizens (a falsity, how- 
ever, as to many things), and assuming it to be true 
that without competition here, all of the producers of 
the rest of the world would combine, and thereby fix 
the selling price to our consumer above what it should 
be, still it might be asked, without impertinence, if a 
tariff tax, so high as to exclude importation, should be 
enforced, what would prevent the home producers from 
forming combinations and trusts and agreements that 
they would not undersell each other, and arbitrarily 
fix the selling price of the articles too high? Nothing. 

The question for the consumer to ask, then, is, in 
which case are combinations, agreements, and trusts 
that arbitrarily fix prices, more likely to occur, when 




. TAXATION. 199 

competition is open to the world or limited to one 
country alone? When limited to one country alone. 
Does not the probability of such agreements lessen as 
the number required to enter into them increases? 
Certainly. 

What light does history furnish on this subject, for 
we have heretofore operated, and still do operate, un- 
der such a law? History answers back, that the pre- 
tended claim of the protectionists is false; that their 
real purpose in demanding a protective tariff tax that 
will exclude competition from abroad is to enable them 
to form unrighteous combinations that they may rob 
their neighbors and fellow citizens, as evidenced by 
the fact that trusts have heretofore, under such laws, 
been formed by the home producers of nearly, if not 
quite, every article included in the tariff schedule. 
These trusts have stopped the wheels of machinery, 
limited the amount of production, that the value of 
the articles must rise, and that an equal or greater 
profit might be realized with less labor and expense. 
A monopoly being the privilege of conducting a busi- 
ness in which there is not free competition, advantages 
arising because thereby prices may be arbitrarily fixed, 
is it not plain to be seen that a protective tariff cre- 
ates monopolies? They certainly restrict competition 
to within one country. A combination of the pro- 



200 FUNCTIONS OF GOVERNMENT, 

ducers of one product within one country is not im- 
practicable as experience in our own country proves. 
Some may say that within a country to which compe- 
tition is limited any one is at liberty to produce the 
article protected, and therefore the rights of the cit- 
izens in the same country are maintained equal, but 
such a statement is untrue. 

Suppose a tax levied upon the importation of sugar, 
and thereby the sugar producers of this country to be 
enabled to exact higher prices for sugar produced by 
them than they otherwise could do, can it truthfully 
be said that anybody in the United States may engage 
in the production of sugar? Are not the sugar pro- 
ducing lands of the United States limited in extent, 
and are they not already wholly appropriated? 

Likewise as to iron. Are not the iron lands already 
in the exclusive possession of some, so that a tax upon 
the importation of iron benefits those possessing the 
iron lands, and not all the people of the whole coun- 
try? If it be said in answer to this, "yes, that is so, but 
anyone may buy of those possessing the lands," the re- 
ply is, that by reason of the tariff, higher prices are de- 
manded for the lands that constitute the source of the 
article protected. 

In the end, then, if the article protected be one of 
which this country, under free conditions, would, upon 



TAXATION. 201 

the whole, be an importer instead of an exporter, it is 
the land-owner that receives the advantages from the 
tax. But, however, if the article protected wa& not 
the product of the soil in its "raw" state, but, instead, 
was a manufactured article from that "raw material," 
and if there was no tariff tax upon the "raw material," 
then, and in that case, the tariff would not benefit the 
land-owner, but rather create entirely new monopolists 
in the persons of those who might manufacture the 
article — monopolists because protected from the com- 
petition of the world outside of the country maintain- 
ing the tariff. 

But if the law should impose a tax upon the im- 
portation of an article, such as wheat, of which this 
country is an exporter, that is, produces more of it than 
is demanded for home consumption, the surplus of 
which must be sold abroad, the price of which surplus 
is then fixed by the supply and demand of the world, 
the price of which surplus, fixed as aforesaid, always 
fixing the price of that which is consumed at home, is 
it not certain that such a tax would be of no advantage 
to the owners of wheat producing lands in this coun- 
try, because it does not enable them to fix arbitrarily 
the price of w^heat? The wheat farmers of this country 
have not realized this, and being human and willing to 
gain undue advantages over others, and supposing that 



202 FUNCTIONS OF GOVERNMENT. 

a law providing for a tax upon the importation of 
wheat would give them an advantage the same as 
would a similar law give advantage to those owning 
land producing articles not, however, of which we, upon 
the whole, are exporters, have as a class favored pro- 
tective tariff laws. The truth is, that in this country 
no protective tariff law that has ever been enforced, or 
that can be devised, has helped or can help but a few 
to the detriment of the many. And it is pitiable to see 
people, as is often the case, fighting for the benefit of 
others against their own interests. 

As all wealth is the product of labor applied to 
land, do not these considerations again carry us back to 
matters formerly considered, and enable us to see that 
in the end to stop trusts, that is, unholy combinations 
that arbitrarily fix prices, it will be necessary to im- 
pose such terms for holding land, the source of all 
wealth, that it will be unprofitable to hold it and let it 
lie idle? 

A tax upon the importation of articles into this 
country paid by the consumer, whether so extended as to 
be distinctively protective or not, is wrong in principle. 
It contravenes rather than proceeds upon the lines of 
natural law. It creates inequalities instead of main- 
taining natural equalities of rights among men. And 
among the evils of such legislation is the one, by no 



p 



TAXATION. 203 



means unworthy of consideration, that whenever a 
law-making body consents to legislate for the benefit 
of classes, then lobbies evolve, then corruption of legis- 
lators begins, and then the perpetuity of the govern- 
ment is endangered. Whenever a government con- 
fines itself to the exercise of its legitimate functions, 
then, and only then, will bribery of legislators cease, 
because only in that case will there be no motives to 
corrupt. 

Another system of national taxation — the income 
tax law — recently became so popular as to be em- 
bodied in the form of a law, which, however, was de- 
clared to be null and void by our supreme court upon 
constitutional grounds. It provided for the taxation 
of individuals in proportion to their incomes. 

If it be right that he who may chop two cords of 
wood in a day should pay twice as much to support the 
government as he who may chop only one cord, then 
our constitution ought to be so amended that that idea 
may become a law. 

But if it be true that a man is his own owner, that 
he is not a slave, that to himself and not to others be- 
longs the fruit of his toil, that it is not a cause of com- 
plaint as between man and man that men are created 
with unequal abilities, then such a system is not based 
upon principle, upon truth, and would not be condu- 



204 FUNCTIONS OF GOVFRNMENT, 

ciye to justice but in contravention of it. If the main- 
spring of human action is not to be broken, if the 
wheels of human action are not to be stopped, if prog- 
ress is to go on, if civilization is to remain permanent 
and improve, if the dreams of life are to be realized, 
then the idea involved must not crystallize into law, 
either in relation to the subject of taxation or any oth- 
er subject. 

If the custom is to continue of allowing individuals 
to operate monopolies without sufficient regulation 
and control by government to deprive them of special 
advantages that otherwise would accrue to them there- 
by, then the evil of such a system of taxation might 
somewhat offset the other evil spoken of, but the work 
of exactly counteracting certain evils by committing 
others is too delicate a task to be committed with 
safety to a legislative body. 

The secret of the popularity of such proposed legis- 
lation is in the fact that the people generally realize 
that great injustice prevails, whereby some ordinary 
people become multi-millionaires and others of equal 
capacities are unable for lack of opportunities, to 
make a decent living. These people do not know the 
source of the injustice, do not know how to remedy the 
evil, and in despair are willing to administer a poison 
to the body politic in the hopes that it may serve as an 



TAXATION. 205 

antidote to another known to be in the system. That 
such proposed legislation should receive such popular 
favor indicates the danger that threatens any govern- 
ment that maintains inequalities of rights aiiiong its 
citizens. It demonstrates that a popular government 
should be on the alert to avoid the occurrence of evil, 
and ready and willing and quick to remedy any evil 
upon the slightest manifestation of symptoms thereof; 
otherwise, when slight indisposition may have devel- 
oped into a disease, the patient, the body politic, may 
be killed with experimental medicines. That there is 
something wrong with our body politic everybody ad- 
mits, and that such legislation as an income tax should 
be seriously considered, only indicates that our people 
do not propose to malinger, but propose to kill or cure. 

As has been well said by another it would be as 
practicable to stand a pyramid on its apex as to main- 
tain a government over an intelligent people that suf- 
fers inequalities of rights among its citizens to exist; 
' either may balance in a calm, but a slight storm will 
disturb the equilibrium of either. 

Is it not true, as anticipated, that the justice of the 
"single tax" has become more apparent by contrast 
with other systems? 



CHAPTER XV. 
CONCLUSION. 

It will be remembered that the conclusion was 
reached in the introductory chapter that the deplora- 
ble condition of our industrial affairs is due either to 
nonfeasance or malfeasance upon the part of our gov- 
ernment. 

Our subsequent investigations showed that the 
government has been guilty of either nonfeasance or 
malfeasance in five particulars, as follows: 

First — In regard to the terms of holding land. 

Second. — In regard to control of the operation of 
other monopolies. 

Third. — ^In regard to interference with the conduct 
of business not monopolistic in its character. 

Fourth. — In regard to taxation. 

Fifth. — In regard to money. 

Bearing in mind the errors of our government in 
each of said particulars, as pointed out in the. respec- 
tive chapters upon the subjects, it may be stated that, 
of said errors, those in connection with the first and 
second particulars constitute instances of nonfeasance, 
and those in connection with the third, fourth and 



CONCLUSION. 207 

fifth, of malfeasance upon the part of our government. 

It remains for us to determine whether or not said 
errors have constituted integral factors in causing our 
present condition of industrial depression. 

First. — As a result of nonfeasance upon the -part of 
our government, in connection with the first function 
of every government, individuals appropriate the 
ground rents, which amount annually to billions of 
dollars. In his recent work on "Natural Taxation," 
Thomas G. Shearman has shown that the number of 
individuals realizing these advantages constitute but a 
small per cent of our population. Our population be- 
ing only about seventy-five millions, certainly a misap- 
propriation of billions of dollars each year must have 
been an integral factor in producing the "hard times" 
of a majority of our people. 

By this nonfeasance, not only do a few of our peo- 
ple gain said advantages to the disadvantage of the 
remainder thereof (a condition of things, however, 
which in itself would certainly produce great inequali- 
ties in the amount of wealth among our people within 
a comparatively few years), but on account of our gov- 
ernment allowing those values which naturally belong 
to all to be appropriated by a few — values that 
would be more than enough to pay the expenses of our 
national, state, and local governments as at present 



208 



FUNCTIONS OF GOVERNMENT. 



administered — the people, as a whole, are taxed to pay 
the expenses of all the branches of government. This 
amounts to billions of dollars annually. 

Suppose a father to have a sufficient income each 
year to support himself, and that he has two sons. 
Suppose him to give his income to one of his sons, and 
then require each son to contribute to his support in 
proportion as he consumed some article. Would not 
great injustice result and great inequalities of wealth 
between his sons arise, other things being equal? 

This supposed case illustrates the real condition of 
things so far as our national government is concerned, 
because it levies no taxes upon land values, but rather 
upon individuals in proportion as they consume cer- 
tain articles. 

If, after the father gave all of his income to one of 
his two sons, he required them to support him in pro- 
portion to their abilities, habits of industry and econ- 
omy, that is, in proportion to the amounts of their ac- 
quired wealth, the case then would illustrate the con- 
dition in our state governments in so far as they levy 
taxes upon personal property, necessitated by failure 
to fully tax land values. 

Second. — As a result of nonfeasance upon the part 
of our government, in connection with railways and 
other monopolies classified with them in Chapter IX, 



CONCLUSION. 209 

the patrons, in so far as such monopolies charge un- 
reasonable rates, are forced to pay annual tribute to 
the owners. 

It should be borne in mind that the monopolies of 
this class are all real land monopolies because their 
advantages arise by reason of having an exclusive or 
a superior use of land in highways or elsewhere, even 
though it may consist only in the privilege of main- 
taining a wire, as in the case o-f a telegraph company. 
Therefore, they are beneficiaries by reason of the non- 
feasance of the government in the first particular 
specified. But we are now to consider special advan- 
tages derived by the owners of these monopolies by 
reason of the nonfeasance of the government in failing 
to control their charges. The owners of these monopo- 
lies constitute but a very small per cent of our people, 
while the patrons constitute a large majority of them. 

As to whether or not this instance of nonfeasance 
constitutes a substantial factor in causing our hard 
times, will depend upon whether or not such com- 
panies are charging unreasonable rates; and if so, 
whether or not such charges net them any considera- 
ble sum. Certainly our system of government permits 

such companies to enforce such rates of charges. 

* 
The gross receipts of these companies mount into 

billions of dollars annuallv. The statement is here 



210 FUNCTIONS OF GOVERNMENT. 

ventured that in Minnesota there is not one official 
who knows what would be the reasonable cost of the 
reproduction of a single plant of any of these com- 
panies operating within this state, and, in all proba- 
bility, a like statement would be true as to many, if 
not all, of the other states of the Union. 

Surely, then, it is not certain but what all of such 
companies are maintaining charges that net them 
more than a reasonable rate of profit upon what would 
be the cost of reproducing their respective plants. But 
why hesitate to assume what is notoriously true and 
generally admitted to be so, or stop to prove, that 
nearly all, if not all, of such companies are maintain- 
ing unreasonable rates of charges in an endeavor to 
realize not only what is right, but, in addition thereto, 
enough to enable them to pay dividends upon large 
amounts of fictitious stock. 

It is within the bounds of truth to say that by the 
nonfeasance of the government in thisi particular, a 
large majority of the people are drained of many mil- 
lions of money each year for the benefit of a very few. 

Third. — In specifying the interference by gov- 
ernment with business not monopolistic in its charac- 
ter as a particular in which the government is guilty 
of malfeasance, reference was made to matters dis- 
cussed in Chapter YIII. That discussion is embodied 



CONCLUSION. 211 

in this work, not so much from a belief that the mat- 
ters therein complained of constituted a very potent 
factor in producing the present condition from which 
we seek relief, as for the purpose of showing clearly 
the distinction which exists between monopolies and 
other kinds of business, that in the future legislation 
might be avoided upon matters not properly the sub- 
ject of legislation, and that it might more certainly be 
obtained in proper cases. 

Though legislation heretofore has not been very ex- 
tensively enacted regulating business not monopolistic 
in its character, still if what was said relative to so- 
cialism in Chapter V is sound, that government is 
trespassing upon dangerous ground which regulates 
the operation of a business not monopolistic in its 
character, such as the banking business instanced in 
said chapter, and such as the insurance business that 
might have been instanced. Besides, when a govern- 
ment prescribes that certain kinds of business not con- 
stituting a nuisance can only be conducted upon certain 
lands, as in the case of the ordinance fixing a hay-mar- 
ket, instanced also in said chapter, extra advantages 
are conferred upon some to the detriment of others. 

Fourth. — In the fourth particular of errors, the 
government has been charged with malfeasance in 
connection with taxation. As pointed out in Chapter 



212 FUNCTIONS OF GOVERNMENT. 

XIV, by reason of protective tariff laws, two classes of 
people have been benefited at the expense of the re- 
mainder of the people, viz., those owning land produc- 
ing that which, upon the whole, we import instead of 
export, and which is included in the tariff schedule. 
For illustration, it benefits those owning iron lands, 
iron ore being included in the schedule, and we not be- 
ing exporters of it to an extent that its price at home 
is fixed by the price of a surplus sold abroad. The 
other class consist of those engaged in the manu- 
facture of those articles included in the schedule of 
which we are not, upon the whole, exporters, and the 
raw material of which is not included in the schedule. 

Those classes lay a continual tribute, in the form of 
increased prices for their products, upon the consum- 
ers thereof, which include a majority of our people. 
The annual aggregate amount of this tribute certainly 
amounts to a very large sum of money. 

When we consider that of our whole population 
not more than twenty-five millions are self-sustaining 
adults, then the effect of the extortion from only a por- 
tion of them of billions of dollars each year must be- 
come more apparent; and from the operation of the 
evils already considered we would expect to find the 
condition of the people no better than that actually 
existing. But the end of extortion is not yet reached. 



CONCLUSION. 213 

Fifth. — Lastly, what about the effects of the error 
of goYernment in the fifth particular specified? Cer- 
tainly those loaning money in recent years are those 
who have obtained it largely by reason of having en- 
joyed some of the advantages hereinbefore pointed 
out. To verify this conclusion, let any one look about 
him and see if the rich whom he knows have not be- 
come rich by reason of having enjoyed the benefits of 
some monopoly; have not become so by reason of spec- 
ulating in the values of lands located in cities, or in 
values of lands containing mines, or by being inter- 
ested in the franchise of some railway, telegraph, gas 
or other like company, or by engaging in the manufac- 
ture of some article in which competition in sales is 
limited by a protective tariff. The money-lenders, 
then, as a class, are the same people who own and 
benefit by the monopolies. 

By reason of these different processes of extortion 
. continuing for years, the subjects thereof have become 
heavily in debt. But the creditors, not content to let 
the goose live that lays the golden egg, not content 
until prosperity should be wholly extinct, caused the 
demonetization act of 1873 to be passed; this served as 
a nether millstone to grind out of the masses of the 
people what was left in them, by increasing the bur- 
den of every debt. 



214 FUNCTIONS OF GOVERNMENT. 

These errors of nonfeasance and malfeasance by 
onr government, all acting simultaneously, liave cer- 
tainly largely contributed to produce, if not wholly to 
cause, that condition from which we cry to be re- 
lieved. 

At the time of the organization of our government 
our small population was confined substantially to the 
Atlantic seaboard. The largest cities then were small 
in comparison with our cities of today. The country 
between the Atlantic and the Alleghenies was but 
sparsely settled, and west of the Alleghenies not at all. 
The then territory of the government was but a small 
portion of what is now embraced within it. As time 
went on and the population grew from natural in- 
crease and from immigration, the sparsely settled 
country became more and more thickly settled, and the 
frontier was pushed farther and farther westward. 

Because of the democratic form of our govern- 
ment, and because of the immense areas of unappro- 
priated good land within its jurisdiction, the immigra- 
tion was unprecedented. The government from time 
to time acquired additional territory to the west and 
to the northwest and the southwest, until its territory 
reached its present proportions. The frontier line in 
its advance westward crossed the Alleghenies, crossed' 
the present states of Ohio, Indiana, and Illinois in the 



CONCLUSION. 215 

order named, and the present states to the north and 
south of them; it crossed the Mississippi and every 
meridian line between it and the Pacific Ocean, reach- 
ing its destination during the decade from 1880 to 
1890. 

The natural advantages and opportunities had then 
become substantially exhausted. True, the frontier line 
had crossed the continent at an unnaturally fast rate of 
speed, owing to speculation in land values which the 
system of land tenure in vogue encouraged; and, as a 
result, some of the country was still sparsely settled, 
some new cities were still to spring up, with new priv- 
ileges to be disposed of, some new railways were still 
to be constructed, but no longer were opportunities of- 
fering special advantages, opening up as fast as de- 
manded. This was the case, substantially, up to the 
time of which we are now speaking. 

But population has continued to increase, though 
less by immigration than before, because of lessened 
opportunities here. The increase of population has in- 
creased the values of the special privileges previously 
acquired, and the time which has elapsed since the 
exhaustion of wholesale opportunities for special ad- 
vantages has proved suflacient to impoverish the many 
and enrich the few, and produce the widespread de- 
pression of industry prevailing here. 



216 FUNCTIONS OF GOVERNMENT. 

There have been periods of industrial depression; 
there have been financial panics; there have been hard 
times in this country before, but never of such long 
duration. Heretofore a decade has suflSced for a re- 
currence of good times, to be followed by another 
period of hard times ; in each case good times were 
sure to follow the hard times. But the present period 
of hard times began about the time of the exhaustion 
of our public domain of any considerable value. Its 
unprecedented period of duration must be due to the 
fact that an era has arrived in the history of this coun- 
try differing from any that has preceded it. 

The present long-continuing period of depression 
is the bitter fruit of the government's errors herein- 
before designated. The whole crop of the bitter fruit 
has not before been harvested because the necessary 
conditions to ripen it, i. e., the exhaustion of natural 
advantages and opportunities, did not prevail until 
within the last decade. Indeed, the full crop has not 
yet ripened; the full e:ffects of the evils have not yet 
been realized, instead, they will continue, and increase 
in severity as time advances if the system that pro- 
duces them be perpetuated. 

But the time has already arrived when, with nat- 
ural advantages limited, if not wholly exhausted, with 
but few, if any, opportunities to escape the effects of 



CONCLUSION. 217 

existing evils, or to acquire new advantages, most of 
our people are obliged to remain where they are and 
bear the pressure caused by advantages enjoyed by 
a few over others — advantages which become more 
and more valuable to the possessor thereof, and more 
and more exhaustive all the time of the resources of 
others. The poor condition of the many cannot improve 
as has ever been the case in the past after short 
periods of industrial depression. Heretofore the con- 
dition of business has recuperated each time after re- 
verses, in spite of evils of bad government, because 
new opportunities were open to the people. 

In fact a new era in the history of the government 
of Great Britain and of the governments of Europe 
has arrived. For centuries the opportunities open to 
their subjects for settlement here served as a safety 
valve to them. But now the safety valve has been at 
least partially closed; the opportunities here have be- 
come limited. Immigration has therefore considera- 
bly lessened, and the time has arrived when the effects 
of the evils of their systems of government are to be 
felt there as never before. 

The question then forces itself upon us: What of 
the future? Will the majority submit to extortion by 
the few to an extent that impoverishes them and enor- 
mously enriches the few? Will the evils we have dis- 
covered be remedied? 



218 FUNCTIONS OF GOVERNMENT. 

What bearing upon the solution of this question 
has the form of our government? In what respects 
is our government, if at all, better than the govern- 
ments of the Old World? In so far as it follows in the 
footsteps of those governments it is no better. Differ- 
ent governments pursuing the same policies are of 
equal merit. Regardless of its form, that government 
is best which most nearly justifies its existence, that 
most nearly maintains the rights of its people equal. 
The government of an absolutely unlimited, hereditary 
monarchy, may be better than that of a pure democ- 
racy. 

Confusing form of government with government 
itself, we have been wont to dote upon our govern- 
ment. While being still attached to the form of our 
government, we must condemn that policy of adminis- 
tration of government that has brought disaster to a 
majority of our people at a time and place, when and 
where, unprecedented prosperity instead should pre- 
vail. 

But why is our form of government better, if it be 
so, than that of hereditary monarchies? Simply be- 
cause under it the will of the majority may be en- 
forced. The merit of our government itself, then, 
must depend, in the end, upon the wisdom of our ma- 
jority. 



CONCLUSION. 219 

Whether or not, then, the evils will be remedied 
that we have discovered to exist in the administration 
of our government, depends upon whether or not a 
majority of our voters will be able to comprehend the 
situation. 

It must be evident to all that as the difficulties of 
making a living increase, the general standard of edu- 
cation must become lower, because more time must be 
devoted to physical labor, leaving less time for study. 

The longer, then, that reform legislation is delayed, 
the time therefor now being ripe, the more danger 
there is that it may not be accomplished; but those 
with the most comprehensive knowledge of the charac- 
ter of the majority of our people entertain the least 
fear of a delay that will jeopardize success. 

There is greater danger of defeat of reform legis- 
lation in the near future from an entirely different 
source. 

. It is evident that any considerable decrease of our 
population would postpone agitation of legislative re- 
form until, by increase of population, present condi- 
tions again recur. And in the United States today 
is there not a class fostering a war spirit? If so, who 
constitute the class? Certainly not the men who 
would fight the battles. Is it not the class composed 
of those who feel that though the increase of popula- 



220 FUNCTIONS OF GOVERNMBNT, 

tion has enriched them, that any further increase 
would hazard the continuation of their undue advan- 
tages? 

It may be, therefore, that the first opportunity that 
the majority of our voters may have to show their wis- 
dom will come in a chance to vote down the prosecu- 
tion of some precipitated or proposed war. 

There awaits us, then, in the future, one of three 
general courses: 

A gradual reduction of the industrial condition of 
our masses, accompanied by a gradual decline of our 
general standard of education and wisdom, until our 
people become subjected to a veritable condition of in- 
dustrial slavery, and are contented therewith; or the 
prosecution of wars, until our population shall have 
become so decreased that the favored few may enjoy 
their undue advantages for another considerable period 
without molestation; or, what is greatly to be desired, 
and more probable, the enactment of reform legislation 
that will justify the existence of government, by main- 
taining the rights of individuals equal, thereby making 
the requirements, imposed upon the human race by na- 
ture, susceptible of accomplishment. 



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